EXHIBIT 4.33
THIS AGREEMENT IS MADE EFFECTIVE as at the 1st day of October, 2003
BETWEEN:
ADDISON YORK INSURANCE BROKERS LTD.
a body corporate incorporated pursuant to the laws
of the State of Delaware,
(hereinafter referred to as the "Purchaser")
and
XXXXX INSURANCE AGENCY, INC.
a body corporate incorporated
pursuant to the laws of the State of California
(hereinafter referred to as the "Vendor")
and
XXXXX REVOCABLE TRUST
a trust formed pursuant to the laws of the State of California,
(hereinafter referred to as the "Shareholder")
and
XXXXXXXXX X. XXXXX XX.
a resident of the City of Arcadia
in the State of California
(hereinafter referred to as "Xxxxx")
WHEREAS the Vendor has its principal offices in Arcadia, California and is
primarily engaged in the insurance agency business in California under the name
of "Xxxxx Insurance Agency, Inc." (the "Business"), and wishes to sell to the
Purchaser substantially all of the Business' assets (other than cash, accounts
receivable and other excluded assets as described herein) and the Purchaser
desires to acquire such assets upon the terms and conditions expressed in this
Agreement;
AND WHEREAS the Shareholder was formed pursuant to the laws of the State of
California by an agreement dated July 7, 1995, and the trustees of the
Shareholder are Xxxxxxxxx X. Xxxxx Xx. and Xxx X. Xxxxx (together referred to
herein as the "Trustees");
AND WHEREAS the Shareholder owns all of the outstanding capital stock of the
Vendor and is entering into this Agreement to provide certain non-competition,
indemnification and other assurances to the Purchaser as a material inducement
for Purchaser to enter into this transaction;
AND WHEREAS Xxxxx currently operates and manages the affairs of the Vendor (in
his capacity as an officer and director of the Vendor) and is entering into this
Agreement to provide
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certain non-competition, indemnification and other assurances to the Purchaser
as a material inducement for Purchaser to enter into this transaction;
NOW THEREFORE in consideration of the premises and the mutual agreements and
covenants herein contained, and for other good and valuable consideration, the
Parties covenant and agree as follows:
1.00 - DEFINITIONS
1.01 In this Agreement, unless there is something in the subject matter or
context inconsistent therewith, the following words and terms shall have
the respective meanings ascribed to them as follows:
(a) "Adverse Consequences" means all charges, complaints, actions, suits,
proceedings, hearings, investigations, claims, demands, judgments, orders,
decrees, stipulations, injunctions, damages, dues, penalties, fines, costs,
amounts paid in settlement, liabilities (whether known or unknown, whether
absolute or contingent, whether liquidated or unliquidated, and whether due
or to become due), obligations, taxes, liens, losses, expenses, and fees,
including all reasonable attorneys' fees and court costs;
(a) "Assumed Contracts" shall mean any right, title, interest, entitlement
or benefit of the Vendor under or in respect of any contract, agreement,
non-competition contract, lease, engagement, commitments including unfilled
orders received by the Vendor in connection with the Business or license
which is applicable to the Business and specifically assumed by the
Purchaser to the extent the same may be assignable to the Purchaser,
including, but not restricted to, the contracts described in Schedule "D"
attached hereto;
(a) "Carrier Appointment" means that the Purchaser has received written
notification from an insurance carrier or wholesaler, as the case may be,
stating that the Purchaser is an authorized agent of the insurance carrier
or wholesaler for the sale of its insurance products;
(a) "Client Files" shall mean all business files, customer lists and other
records applicable to the Business including, without limiting the
generality of the foregoing, the Client List attached as Schedule "A"
hereto, all client files and policies owned by the Vendor and which
reasonably would result in Earned Commissions for the Vendor prior to this
sale and are expected to result in Earned Commissions for the Purchaser
thereafter; all lapsed client files which relate to former clients of the
Business and all records, documents, computer tapes and disks and related
electronic data in which or by which any such Business files, customer
lists, lapsed client files or other records applicable to the Business are
stored or kept;
(a) "Closing Date" means the 6th day of November, 2003, or such other date
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as shall be mutually agreed to by the parties in writing;
(a) "Closing Time" means 3:00 o'clock p.m. Calgary time, on the Closing
Date or such other time on such date as the parties may agree as the time
at which the Closing shall take place;
(a) "Commissions Earned" or "Earned Commissions" shall mean the commission
revenue attributable to policies sold by the Vendor and/or payable under
agreements with insurers, with an effective date after the Closing Date and
which shall include commissions notwithstanding that the same may not have
been invoiced. Notwithstanding the foregoing, the Commissions Earned shall
not include any:
(i) Contingency Revenues;
(ii) revenues derived by the Purchaser from those persons or agencies set
forth on Schedule "M" attached hereto or any revenues derived by the
Purchaser from similar joint venture or revenue processing agreements
which the Purchaser may enter into after the Effective Date;
(iii) life insurance revenues;
(iv) interest income; or
(v) finance charges;
(a) "Contingency Revenue" means those commissions paid to the Purchaser by
insurance companies based upon the volume, growth and or profitability of
insurance business placed with such insurance companies by the Purchaser;
(a) "Effective Date" means October 1st, 2003; (a)
(a) "Environmental, Health, And Safety Laws" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the
Resource Conservation and Recovery Act of 1976, and the Occupational Safety
and Health Act of 1970, each as amended, together with all other laws
(including rules, regulations, codes, plans, injunctions, judgments,
orders, decrees, rulings, and charges thereunder) of federal, state, local,
and foreign governments (and all agencies thereof) concerning pollution or
protection of the environment, public health and safety, or employee health
and safety, including laws relating to emissions, discharges, releases, or
threatened releases of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes into ambient air, surface water,
ground water, or lands or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants, or chemical, industrial, hazardous,
or toxic materials or wastes;
(a) "Escrow Agent" means Demiantschuk Xxxxxx Xxxxx & Xxxxxxxxx, Barristers
and Solicitors, located at 1200, 0000 - 0xx Xxxxxx, XX, Xxxxxxx, Xxxxxxx,
X0X 0X0.
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(a) "Escrow Fund" means the account(s) set up by the Escrow Agent in order
to receive and administer, inter alia, the Initial Deposit and the Final
Payment in accordance with the terms of Article 3.00 hereof and the Escrow
Agreement; (a)
(a) "Intellectual Property" means (A) all inventions (whether patentable
or unpatentable and whether or not reduced to practice), all improvements
thereto, and all patents, patent applications, and patent disclosures,
together with all reissuances, continuations, continuations-in-part,
revisions, extensions, and reexaminations thereof, (B) all trademarks,
service marks, trade dress, logos, together with all translations,
adaptations, derivations, and combinations thereof and including all
goodwill associated therewith, and all applications, registrations, and
renewals in connection therewith, (C) all copyrightable works, all
copyrights, and all applications, registrations, and renewals in connection
therewith, (D) all mask works and all applications, registrations, and
renewals in connection therewith, (E) all trade secrets and confidential
business information (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and marketing
plans and proposals), (F) all computer software (including data and related
documentation), (G) all other proprietary rights, and (H) all copies and
tangible embodiments thereof (in whatever form or medium);
(a) "Lease Agreement" means the form of lease agreement for the Premises
of the Business as attached as Schedule "C" hereto;
(r) "Non-Competition Agreement" means those agreements respecting
competition by the Vendor, Shareholder and Xxxx Xxxxx substantially in the
form attached hereto as Schedule "F";
(p) "Premises" means the property municipally described as follows Suite A
and H, 000 X. Xxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx, 00000;
(p) "Purchased Assets" means, subject to paragraph 2.03 herein, all of the
assets, property and rights of any kind and description owned and used by
the Vendor or held by it for use in, or in respect of the operations of,
the Business wherever such assets, property or rights are located as of the
Effective Date hereof including, without limitation, the following assets,
properties and rights:
i all rights, title and interest of the Vendor in, to and under all
Assumed Contracts, contracts, leases, agreement, engagement,
commitments including unfilled orders received by the Vendor in
connection with the Business and other rights of or pertaining to the
Business as are specifically accepted by the Purchaser in writing,
whether written or unwritten, provided that the Purchaser shall in no
event be liable or responsible for any liabilities or obligations
thereunder which shall be in existence at, or accruing for or during
the period prior to, the Closing Date except as otherwise agreed in
this Agreement;
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ii all fixed assets, equipment, supplies, inventory of and pertaining to
and used in the Business, including without limiting the generality of
the foregoing, all furniture, furnishings, fixtures, leasehold
improvements (whether or not fixtures), and all other materials and
accessories, goods, chattels and effects of all kinds utilized by the
Vendor in connection with the operation of the Business including,
without limitation, computer hardware, credit card verification
equipment, computer software and accounting systems and all of those
other assets listed in Schedule "B" (collectively the "Fixed Assets");
iii the right of the Vendor to carry on the Business under the name of
"Xxxxx Insurance Agency" and the right to use any words or tradenames
of the Vendor indicating that the Business is so carried on;
iv the goodwill of the Vendor in the Business ("Goodwill") including,
without limitation, the rights granted to the Purchaser in respect of,
inter alia, the name "Xxxxx Insurance Agency" for use in the Business,
the right of the Vendor to retain and use all of the Business' present
telephone numbers, listings and advertisements as listed in the
current telephone directory for all locations where the Business is
conducted and all licenses, permits and other required authorizations
issued by any governmental body, which are required in the continued
operation of the Business and which are assignable, and the list of
customers of and suppliers to the Business, and to the extent they
exist and are capable of being assigned any and all customer profiles
and customer databases and all advertising signs, registered and
unregistered trademarks, trade or brand names, service marks,
copyrights, franchises, technology or other processes pertaining to
the Business;
v all of the Vendor's Business records necessary to enable the Purchaser
to renew the Purchased Book of Business (as defined in section
1.00(p)(vii) below);
vi all Intellectual Property related to the Business;
vii all of the Business, including, but not limited to, the life, health,
bond, and property and casualty insurance business (both personal and
commercial lines) and renewals and expirations thereof, together with
all written or otherwise recorded documentation, data or information
relating to the Business, whether compiled by Vendor or by other
agents or employees of Vendor, including, but not limited to: (i)
lists of insurance companies and records pertaining thereto; (ii)
customer lists, prospect lists, policy forms, and/or rating
information, expiration dates, information on risk characteristics,
information concerning insurance markets for large or unusual risks,
and all other types of written or otherwise recorded information
customarily used by Vendor or available to Vendor, including all other
records of and pertaining to the accounts and customers of Vendor,
past and present, including, but not limited to, the active insurance
customers of Vendor (collectively, the "Purchased Book of Business");
viii All other assets of Vendor relating or pertaining to the Purchased
Book of
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Business, including (i) computer disks, servers, software, databases
(whether in the form of computer tapes or otherwise), related object
and source codes, and associated manuals, and any other records or
media of storage or programs for retrieval of information pertaining
to the Purchased Book of Business, (ii) all supplies and materials,
including promotional and advertising materials, brochures, plans,
supplier lists, manuals, handbooks, and related written data and
information, (iii) customer and other deposits and prepayments, (iv)
transferable approvals, permits, licenses, orders, registrations,
certificates, variances and similar rights obtained from governments
and governmental agencies to own and operate the Business and
Purchased Assets; and (v) the Client Files; and
ix all rights, title and interest of the Vendor in, to and under all
contracts, leases, agreements, engagements, commitments and all
commission revenue derived by the Vendor from those persons or
agencies set forth on Schedule "M" attached hereto and forming a part
hereof;
(r) "Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under
Code Section 59A), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value
added, alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not; and
(r) "Tax Return" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes arising from the
operation of the Business or the ownership of the Purchased Assets,
including any schedule or attachment thereto, and including any amendment
thereof.
1.02 The following are the Schedules which are to be attached to and are
incorporated into this Agreement by reference and are deemed to be a part
hereof:
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(d) Schedule "A": Client list including names of customers (current and
previous), all commission revenues, all premiums and all policies in
force for each client, also referred to as the Accounts;
(e) Schedule "B": Fixed Assets of the Vendor on Closing Date;
(f) Schedule "C" Real Property Lease Agreement;
(g) Schedule "D": Assumed Contracts (including Insurance Company
Contracts) of the Vendor;
(h) Schedule "E": Financial Statements of the Vendor;
(i) Schedule "F" Form of Non-Competition Agreement for Vendor, Xxxxx and
Shareholder;
(j) Schedule "G" Xxxxx Employment Agreement;
(k) Schedule "H" Permitted Encumbrances;
(l) Schedule "I" Tax Returns and Other Tax Matters;
(m) Schedule "J" Volume Reports - Summary Production Reports;
(n) Schedule "K" Vendor's Insurance;
(o) Schedule "L" Escrow Agreement;
(p) Schedule "M" Joint Venture Agencies;
(q) Schedule "N" Schedule of Vendors Existing carrier appointments With a
B+ or Higher Rating;
(r) Schedule "O" Promissory Note; and
(s) Schedule "P" Agency Agreement
1.03 Unless otherwise indicated, all dollar amounts referred to in this
Agreement are in United States funds.
1.04 Any references herein dealing with federal or state legislation, rules,
regulations or codes shall be deemed to be a reference to those federal or
state legislation, rules, regulations or codes as amended from time to
time.
2.00 - THE ACQUISITION
2.01 At the Effective Date, and upon and subject to the terms and conditions of
this Agreement, the parties mutually covenant and agree as follows:
(a) Vendor shall sell, convey and assign to Purchaser all right, title and
interest of Vendor in and to the Purchased Assets free and clear of
all liens, pledges, security interests, charges, restrictions or
encumbrances of any nature whatsoever, except for those described in
Schedule "H" annexed hereto; and
(b) Purchaser shall purchase and accept the Purchased Assets from Vendor
and assume the Assumed Contracts in exchange for the consideration
described in Article 3.00.
2.02 On the Effective Date, Purchaser shall assume all of the obligations and
liabilities first arising or occurring under the Assumed Contracts after
the Effective Date. Except for these obligations, the Purchaser shall not
assume or be deemed to have assumed any liability or obligation of the
Vendor whatsoever.
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2.03 Vendor does not agree to sell or assign, and Purchaser does not agree to
purchase or assume, any assets, liabilities and obligations not described
in paragraphs 2.01 or 2.02 of this Agreement. Without limiting the
foregoing and notwithstanding anything to the contrary set forth herein,
Purchaser shall not purchase or assume any of the following:
(a) Vendor's cash in hand or in banks and other readily liquid working
capital as of the close of business on the Effective Date, including
Vendor's accounts and other receivables, money market certificates,
stocks, bonds, and Vendor's automobiles and other vehicles;
(b) Vendor's claims, refunds, causes of action, choses in action, rights
of recovery, rights of set off, and rights or recoupment (including
any such right relating to the payment of Taxes) except those relating
to the Purchased Assets or the Business arising after the Effective
Date;
(c) (i) any contract, lease or other obligation that relates to the
Purchased Assets or the Business and is not otherwise specifically
assigned to Purchaser under this Agreement or (ii) any contract, lease
or other obligation whatsoever not relating to the Purchased Assets or
the Business;
(d) (i) Vendor's corporate charter, taxpayer and other identification
numbers, seals, minute books, stock transfer books, blank stock
certificates, and other documents relating to the organization,
maintenance, and existence of Vendor as a corporation or (ii) any of
the rights of Vendor under this Agreement;
(e) any duty or liability of any type whatsoever with respect to any
employee or to any pension or profit sharing plan or other employee
benefit; or
(f) (i) any liability for income, transfer, sales, use, and other Taxes,
including any such Taxes arising in connection with the consummation
of the transactions contemplated hereby (including any Taxes arising
because Vendor is transferring the Purchased Assets), (ii) any
liability of Vendor for the unpaid Taxes of any person or entity under
United States Treasury Regulation 1.1502-6 (or any similar provision
of state, local, or foreign law), as a transferee or successor, by
contract, or otherwise, (iii) any obligation of Vendor to indemnify
any person or entity (including any Shareholder) by reason of the fact
that such person or entity was a director, officer, employee, or agent
of Vendor or was serving at the request of any such entity as a
partner, trustee, director, officer, employee, or agent of another
entity (whether such indemnification is for judgments, damages,
penalties, fines, costs, amounts paid in settlement, losses, expenses,
or otherwise and whether such indemnification is pursuant to any
statute, charter document, bylaw, agreement, or otherwise), (iv) any
liability of Vendor for costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby, or (v) any
liability or obligation of Vendor under this Agreement (or under any
related agreement between Vendor on the one hand and Purchaser on the
other hand entered into on or after the date of this Agreement).
2.04 The consummation of the purchase and sale of the Purchased Assets shall
take place by way of the mutual exchange of documents under appropriate
trust conditions at the Closing Time on the Closing Date at the offices of
the Escrow Agent, unless another date or place is agreed to in writing by
the parties hereto.
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3.00 - CONSIDERATION AND METHOD OF PAYMENT
3.01 Subject to the terms and conditions of this Agreement, the Vendor hereby
sells, assigns and transfers to the Purchaser and the Purchaser hereby buys
from the Vendor the Purchased Assets for the aggregate sum of $1,747,188.00
(the "Purchase Price"), subject to Adjustment as set out in paragraph 3.04.
3.02 The parties agree to allocate the aggregate of the Purchase Price (as
adjusted pursuant to the Adjustment) among the Purchased Assets as follows
(the "Allocation"): (i) $35,000.00 shall be allocated to the Fixed Assets
listed on Schedule "B"; (ii) $30,000.00 shall be allocated to the covenant
of the Vendor as set forth in the Non-Competition Agreement attached as
Schedule "F" hereto; (iii) $5.00 shall be allocated to the covenant of the
Shareholder as set forth in the Non-Competition Agreement attached as
Schedule "F" hereto; (iv) $4,995.00 shall be allocated to the covenant of
Xxxxx as set forth in the Non-Competition Agreement attached as Schedule
"F" hereto; (v) $838,594.00 shall be allocated to the Goodwill; and (vi)
$838,594.00 shall be allocated to the Purchased Book of Business. Each of
Purchaser and Vendor shall file, in accordance with the Internal Revenue
Code of 1986, as amended (the "Code"), an Asset Acquisition Statement on
Form 8594 with its federal income tax return for the tax year in which the
Closing Date occurs, and shall contemporaneously provide the other party
with a copy of the Form 8594 being filed. The Form 8594 shall be consistent
with the Allocation. Each of Purchaser and Vendor also shall file any
additional Forms 8594 from time to time as are required to reflect any
Adjustments to the Purchase Price as required hereunder or any alteration
in the allocation required by the Purchaser's auditor, and again shall
contemporaneously provide the other party with a copy of the additional
Form 8594 being filed. If there is an Adjustment in the Purchase Price
resulting from the application of Article 3.00 hereof, then the amounts
allocated to Goodwill and the Purchased Book of Business shall each be
reduced by an equal amount corresponding to one half of the Adjustment. The
final version of each additional Form 8594 as agreed to by Purchaser and
Vendor shall be timely filed by each of Purchaser and Vendor. All
indemnification payments made pursuant to Article 6.00 hereof shall be
treated as adjustments to the Purchase Price.
3.03 The Purchase Price shall be subject to adjustment (as more particularly set
forth in this Article 3.00, the "Adjustment) and be paid as follows:
(a) a down payment to the Vendor on the later of October 1st, 2003 or the
Closing Date in the sum of $174,719.00 (the "Down Payment");
(b) on the Closing Date the Purchaser shall provide the sum of
$1,397,750.00 (the "Initial Deposit") to the Escrow Agent, which sum
shall be deposited into the Escrow Fund and released to the Vendor in
accordance with the terms paragraph 3.05 and the Escrow Agreement
attached as Schedule "L" hereto; and
(c) on the Closing Date, the Purchaser shall provide the Escrow Agent with
a promissory note (the "Promissory Note"), attached as Schedule "O"
hereto, drawn in favour of the Vendor in the principal amount of
$174,719.00 (the "Final Payment") and bearing no interest. The
Promissory Note shall be held by the Escrow Agent dealt with in
accordance with the terms of paragraph 3.04 and the
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Escrow Agreement.
3.04 The Promissory Note and the Final Payment shall be dealt with in accordance
with the following terms:
(a) within 5 days of the end of the 14th month after the Effective Date,
the Purchaser shall prepare a Purchase Price reconciliation to show
the actual Commissions Earned from the Business. If the actual Earned
Commission revenue from the Business for the one year period from the
Effective Date is less than $970,660.00, then the Purchase Price will
be adjusted downward by ONE DOLLAR AND EIGHTY CENTS ($1.80) for each
ONE ($1.00) DOLLAR that the actual Earned Commission revenue from the
Business is below $970,660.00 (the "Adjustment"). For greater
clarification, the Adjustment cannot have the effect of increasing the
Purchase Price, the Adjustment can only lower the Purchase Price;
(b) if after the Adjustment is determined, there is no reduction in the
Purchase Price, then the full amount of the Final Payment shall be
provided to the Escrow Agent by the Purchaser and released into the
Escrow Fund. The Final Payment shall be less than or equal to
$174,719.00 after making the Adjustment;
(c) if after the Adjustment is determined, there is a reduction in the
Purchase Price, then the Escrow Fund shall only be entitled to receive
the amount by which the Final Payment exceeds the Adjustment.
(d) if the Adjustment exceeds the Final Payment, then both the Escrow Fund
shall be reduced (the "Escrow Fund Reduction") and the Purchase Price
shall be reduced by the amount by which the Adjustment exceeds the
Final Payment and the amount of the Escrow Fund Reduction shall be
paid to the Purchaser out of the Escrow Fund by the Escrow Agent.
(e) Any and all payments to be made in or out of the Escrow Fund pursuant
to this paragraph shall be made within 15 months of the Effective
Date;
(f) the Parties agree that Earned Commission revenue from the Business
shall be calculated on a pre-tax basis;
(g) once the Adjustment has been determined and if the Final Payment
exceeds the Adjustment, then the Purchaser shall deliver to the Escrow
Agent a certified cheque or money order in the amount of the Final
Payment less the Adjustment, if any, (the "Adjusted Final Payment"),
and the Escrow Agent shall:
i) release the Adjusted Final Payment into the Escrow Fund within 2
business days of the Escrow Agent's receipt thereof; and
ii) deliver the Promissory Note to the Purchaser; and
(h) if the Final Payment exceeds the Adjustment and the Purchaser fails to
deliver a certified cheque or money order to the Escrow Agent in
accordance with the terms of sub-paragraph 3.04(g), then the Escrow
Agent shall deliver the Promissory Note to the Vendor.
3.05 The Escrow Agent shall deposit the Initial Deposit and the Final Payment
(as adjusted and once received) into the Escrow Fund which shall be
administered in accordance with the terms of the Escrow Agreement. The
monies deposited into the Escrow Fund shall be dealt with by the Escrow
Agent in accordance with the following terms:
(a) within three days of the end of the 15th month after the Effective
Date, the Escrow
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Agent shall deliver to the Vendor a solicitor's trust cheque, a
certified cheque or a money order for one sixth of all of the monies
in the Escrow Fund;
(b) within three days of the end of the 27th month after the Effective
Date, the Escrow Agent shall deliver to the Vendor a solicitor's trust
cheque, a certified cheque or a money order for one fifth of all of
the monies in the Escrow Fund;
(c) within three days of the end of the 39th month after the Effective
Date, the Escrow Agent shall deliver to the Vendor a solicitor's trust
cheque, a certified cheque or a money order for one fourth of all of
the monies in the Escrow Fund;
(d) within three days of the end of the 51st month after the Effective
Date, the Escrow Agent shall deliver to the Vendor a solicitor's trust
cheque, a certified cheque or a money order for one third of all of
the monies in the Escrow Fund;
(e) within three days of the end of the 63rd month after the Effective
Date, the Escrow Agent shall deliver to the Vendor a solicitor's trust
cheque, a certified cheque or a money order for one half of all of the
monies in the Escrow Fund; and
(f) within three days of the end of the 75th month after the Effective
Date, the Escrow Agent shall deliver to the Vendor a solicitor's trust
cheque, a certified cheque or a money order for the balance of all of
the monies in the Escrow Fund.
3.06 The Purchaser's responsibility with respect to the Purchase Price shall be
limited to the payment of the funds to the Escrow Agent, the authorized
representative of the Vendor or the Vendor's counsel, as the case may be.
3.07 All rights of Adjustment and set off set forth in Article 3.00 shall
survive the completion of this Agreement.
4.00 - REPRESENTATIONS, WARRANTIES AND COVENANTS
4.01 Subject to the fulfilment of the Conditions Precedent set out in paragraphs
7.01(k) and 7.02, the Purchaser represents and warrants to the Vendor as
follows:
(a) Purchaser is a corporation organized and in good standing under the
laws of Delaware, and its status is active. Purchaser has all
requisite corporate power and authority and all necessary governmental
approvals to own, lease, and operate its properties and to carry on
its business as now being conducted and as proposed to be conducted.
Purchaser is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the property owned, leased, or
operated by it or the nature of the business conducted by it or as
proposed to be conducted by it makes such qualification or licensing
necessary;
(b) Purchaser has the requisite corporate power and authority to execute
and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery, and performance of this
Agreement, and the consummation of the Agreement and the other
transactions contemplated hereby, have been duly authorized by all
necessary corporate action on the part of Purchaser. This Agreement
has been duly executed and delivered by Purchaser, and, assuming this
Agreement constitutes a valid and binding obligation of Vendor,
constitutes a
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valid and binding obligation of Purchaser, enforceable against it in
accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization or similar laws from time to time in effect
which offset creditors' rights generally and general equitable
principles (regardless of whether the issue of enforceability is
considered in a proceeding in equity or in law);
(c) Neither the execution, delivery, or performance of this Agreement by
Purchaser nor the consummation by Purchaser of the transactions
contemplated hereby nor compliance by Purchaser with any of the
provisions hereof will (a) conflict with or result in any breach of
any provision of the Articles of Incorporation or the Bylaws of
Purchaser, (b) require any filing with, or authorization, consent, or
approval of, any Governmental Authority except for necessary reports
and other filings in accordance with the terms of paragraph 7.02, (c)
result in a violation or breach of, or constitute a default under,
result in the acceleration of, create in any party the right to
accelerate, terminate, modify or cancel, or require any notice or
consent any of the terms, conditions, or provisions of any agreement
or other instrument or obligation to which Purchaser is a party or by
which Purchaser or its properties or assets may be bound;
(d) There is no suit, claim, action, proceeding, or investigation pending
or, to the knowledge of Purchaser, threatened against Purchaser or its
affiliates before any Governmental Authority that is reasonably likely
to have a material adverse effect on Purchaser or would prevent
Purchaser from consummating the transactions contemplated by this
Agreement. Purchaser is not subject to any outstanding order, writ,
injunction or decree which, insofar as can be reasonably foreseen,
individually or in the aggregate, in the future would have a material
adverse effect on Purchaser or would prevent Purchaser from
consummating the transactions contemplated hereby. No voluntary or
involuntary petition in bankruptcy, receivership, insolvency or
reorganization with respect to Purchaser, or petition to appoint a
receiver or trustee of Purchaser's property, has been filed by or
against Purchaser, nor shall Purchaser file such a petition prior to
the Closing Date or for one hundred (100) days thereafter, and if such
petition is filed by others, the same shall be promptly discharged.
Purchaser has not made any assignment for the benefit of creditors or
admitted in writing insolvency or that its property at fair valuation
shall not be sufficient to pay its debts;
(e) Purchaser has adequate financial resources and capability to
consummate the transactions contemplated by this Agreement and to
honor its obligations hereunder. Purchaser will not become insolvent
as a result of consummating the transactions contemplated by this
Agreement; and
(f) None of the representations and warranties set forth in this
Agreement, notwithstanding any investigation thereof by Vendor,
contains any untrue statement of a material fact, or omits the
statement of any material fact necessary to render the statements made
not materially misleading.
12
4.02 The Vendor, Xxxxx and the Shareholder, jointly and severally, hereby
represent, warrant and covenant to the Purchaser and acknowledge that the
Purchaser is relying on such representations, warranties and covenants in
connection with its purchase of the Purchased Assets, that: (a) The
Shareholder owns and holds all of the outstanding shares of the capital
stock of Vendor and there are no outstanding warrants, options or rights to
acquire additional shares of the capital stock of Vendor;
(a) The Shareholder is a trust formed pursuant to the laws of the State of
California on July 7, 1995, and Xxxxxxxxx X. Xxxxx Xx. and Xxx X.
Xxxxx are the only trustees of the Shareholder;
(a) Attached as Schedule "E" hereto are the following consolidated
financial statements (collectively the "Financial Statements"): (a)
unaudited consolidated balance sheet and consolidated statements of
income, changes in shareholders' equity and cash flow as of and for
the fiscal years ended September 30, 2000, September 30, 2001,
September 30, 2002 and September 30, 2003 (the "Most Recent Fiscal
Year End") for Vendor; and (b) unaudited consolidated balance sheet
and consolidated statements of income (the "Most Recent Financial
Statements") as of and for the twelve months ended September 30, 2003
(the "Most Recent Fiscal Month End"). The Financial Statements
(including the Notes thereto) have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods covered thereby, present fairly the financial
condition of Vendor, including assets and liabilities (whether
accrued, absolute, contingent or otherwise) as of such dates and the
results of operations of Vendor for such periods, are materially
correct and complete, and are materially consistent with the books and
records of Vendor (which books and records are correct and complete);
provided, however, that the Most Recent Financial Statements lack
footnotes and other presentation items.
(a) Except as set forth on Schedule "I" annexed hereto: (a)
i) Vendor has filed all Tax Returns that it was required to file.
All such Tax Returns were correct and complete in all material
respects. All Taxes owed by Vendor (whether or not shown on any
Tax Return) have been paid, or Vendor has made adequate provision
for the payment therefor. Vendor currently is not the beneficiary
of any extension of time within which to file any Tax Return. No
claim has ever been made by an authority in a jurisdiction where
Vendor does not file Tax Returns that it is or may be subject to
taxation by that jurisdiction. There are no security interests on
any of the assets of Vendor that arose in connection with any
failure (or alleged failure) to pay any Tax;
ii) Vendor has withheld and paid all Taxes required to have been
withheld and paid, if any, in connection with amounts paid or
owing to any employee,
13
independent contractor, creditor, Shareholder, or other third
party;
iii) There is no material dispute or claim concerning any Tax
liability of Vendor either (i) claimed or raised by any authority
in writing or (ii) as to which Vendor has knowledge based upon
personal contact with any agent of such authority. Schedule "I"
annexed hereto lists all federal, state, local, and foreign
income Tax Returns filed or to be filed with respect to Vendor
for taxable periods ended on or after September 30, 2002,
indicates those Tax Returns that have been audited, and indicates
those Tax Returns that currently are the subject of audit. Vendor
has delivered to Purchaser correct and complete copies of all
federal income Tax Returns, examination reports, and statements
of deficiencies assessed against or agreed to by Vendor since
September 30, 2002;
iv) Vendor has not waived any statute of limitations in respect of
Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency;
v) Vendor has disclosed on its federal income Tax Returns all
positions taken therein that could give rise to a substantial
understatement of federal income Tax within the meaning of Code
Section 6662. Vendor is not a party to any Tax allocation or
sharing agreement. Vendor (i) has not been a member of an
affiliated group within the meaning of Code Section 1504(a) of
the Code, and (ii) has not had any liability for the Taxes of any
person or entity under United States Treasury Regulation 1.1502-6
(or any similar provision of state, local, or foreign law), as a
transferee or successor, by contract, or otherwise;
vi) The unpaid Taxes of Vendor (i) did not, as of the Most Recent
Fiscal Month End, exceed the reserve for Tax liability (rather
than any reserve for deferred Taxes established to reflect timing
differences between book and Tax income) set forth on the face of
the balance sheet (rather than in any notes thereto) included in
the Most Recent Financial Statements and (ii) do not exceed that
reserve as adjusted for the passage of time through the Closing
Date in accordance with the past custom and practice of Vendor in
filing its Tax Returns; and
vii) The Vendor shall promptly pay the applicable state sales and use
taxes imposed with respect to the sale and transfer of the
Purchased Assets from the Vendor to the Purchaser pursuant to
this Agreement. The Vendor shall prepare the sales tax return and
submit it to the Purchaser at least seven (7) business days
before its due date. The Purchaser shall have five (5) business
days to approve the return, such approval not to be unreasonably
withheld. Failure to disapprove during such five (5) business day
period shall be deemed approval. The Vendor shall be obligated to
timely file the return and pay the tax. Failure by the Vendor to
timely file the return or pay the tax due shall result in the
Vendor bearing the
14
penalties and interest associated with such late payment or
filing, regardless of whether assessed against the Vendor ot the
Purchaser by the taxing authorities.
(e) Vendor is a corporation organized and in good standing under the laws
of the State of California and its status is active. Vendor has all
requisite corporate power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry on its
business as now being conducted. Vendor is duly qualified to do
business and is in good standing as a foreign corporation in each
jurisdiction where the conduct of its insurance agency business
requires it to be so qualified.
(e) Vendor has the requisite corporate power and authority to enter into,
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this
Agreement have been duly authorized by all necessary corporate action
on the part of Vendor, the Trustees and the Shareholder, including
without limitation Vendor's board of directors. This Agreement has
been, and the other agreements, documents and instruments required to
be delivered by Vendor in accordance with the provisions hereof
(collectively, the "Vendor's Documents") shall be, duly executed and
delivered by duly authorized officers of Vendor on behalf of Vendor,
and this Agreement constitutes, and Vendor's Documents when executed
and delivered shall constitute, the legal, valid and binding
obligations of Vendor, enforceable against Vendor in accordance with
their terms, subject to applicable bankruptcy, insolvency,
reorganization or similar law from time to time in effect which offset
creditors' rights generally and general equitable principles
(regardless of whether the issue of enforceability is considered in a
proceeding in equity or in law).
(e) no person or entity (except the Purchaser pursuant to this Agreement)
has any agreement, option, right or privilege capable of becoming of
an agreement or option for the acquisition of any of the Purchased
Assets of the Vendor;
(e) since the Most Recent Fiscal Month End, Vendor has carried on the
Business in the usual, regular and ordinary course in substantially
the manner heretofore conducted and has taken no unusual actions with
respect to the Business or the Purchased Assets in contemplation of
this transaction, except with the consent of Purchaser. All of
Vendor's accounts payable, including accounts payable to insurance
carriers, are current and reflected properly on its books and records,
and shall be paid in accordance with their terms at their recorded
amounts. Without limiting the generality of the foregoing, since the
Most Recent Fiscal Month End:
i) Vendor has not sold, leased, transferred, or assigned any of its
assets, tangible or intangible, used in the Business other than
for a fair consideration
15
in the ordinary course of business;
ii) Vendor has not entered into any agreement, contract, lease, or
license (or series of related agreements, contracts, leases, and
licenses) relating to the Business outside the ordinary course of
business;
iii) no party (including Vendor) has accelerated, terminated,
modified, or canceled any agreement, contract, lease, or license
(or series of related agreements, contracts, leases, and
licenses) relating to the Business, to which Vendor is a party or
by which it is bound;
iv) Vendor has not imposed or granted any mortgage, pledge, lien,
encumbrance, charge or other security interest upon the Purchased
Assets or any of its assets, tangible or intangible, used in the
Business;
v) Vendor has not made any capital expenditure (or series of related
capital expenditures) relating to the Business outside the
ordinary course of business;
vi) Vendor has not made any capital investment in, any loan to, or
any acquisition of the securities or assets of, any other person
or entity (or series of related capital investments, loans, and
acquisitions) in connection with the Business;
vii) Vendor has not, in connection with the Business or the Purchased
Assets, issued any note, bond, or other debt security or created,
incurred, assumed, or guaranteed any indebtedness for borrowed
money or capitalized lease obligation;
viii)Vendor has not delayed or postponed the payment of accounts
payable and other liabilities relating to the Business;
ix) Vendor has not canceled, compromised, waived, or released any
right or claim (or series of related rights and claims) relating
to the Business;
x) Vendor has not granted any license or sublicense of any rights
under or with respect to any patent, trademark, service xxxx,
logo, corporate name or computer software;
xi) there has been no change made or authorized in the charter or
bylaws of Vendor;
xii) Vendor has not issued, sold, or otherwise disposed of any of its
capital stock, or granted any options, warrants, or other rights
to purchase or obtain (including upon conversion, exchange, or
exercise) any of its capital stock;
xiii)Vendor has not declared, set aside, or paid any dividend or made
any distribution with respect to its capital stock (except in the
form of cash, Vendor's stock, marketable securities or other
assets not included in the Purchased Assets) or redeemed,
purchased, or otherwise acquired any of its capital stock;
xiv) Vendor has not experienced any damage, destruction, or loss
(whether or not covered by insurance) to any of its property
relating to the Business or the Purchased Assets;
xv) Vendor has not made any loan to, or entered into any other
transaction with, any of its directors, officers, and employees
outside the ordinary course of business;
xvi) Vendor has not entered into any employment contract or collective
bargaining
16
agreement, written or oral, or modified the terms of any existing
such contract or agreement;
xvii)Vendor has not granted any increase in the base compensation of
any of its employees employed in the Business;
xviii) Vendor has not adopted, amended, modified any bonus,
profit-sharing, incentive, severance, or other plan, contract, or
commitment for the benefit of any of its employees employed in
the Business;
xix) Vendor has not made any other change in employment terms for any
of its employees employed in the Business;
xx) Vendor has not made or pledged to make any charitable or other
capital contribution; and xxi) Vendor has not entered into any
agreement to purchase or acquire any insurance agency business;
(i) Vendor is not a party to or bound by any collective bargaining
agreement, nor has it experienced any strikes, grievances, claims of
unfair labor practices, or other collective bargaining disputes.
Vendor has not committed any unfair labor practice. To Vendor's
knowledge, there are no organizational efforts presently being made or
threatened by or on behalf of any labor union with respect to
employees of Vendor.
(j) Vendor holds all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities necessary for the lawful
conduct of the Business (collectively, the "Permits"), and Vendor is
in compliance with the terms of the Permits except where failure to
comply would not have a material adverse effect on the Business,
financial condition, operations, results of operations or future
prospects of Vendor. Vendor is not in violation of any law, ordinance
or regulation of any Governmental Entity, including, without
limitation, any law, ordinance or regulation relating to any of
Vendor's employment practices. As of the date of this Agreement, no
investigation or review by any Governmental Entity with respect to
Vendor is pending or, to the knowledge of Vendor, threatened.
(j) the Vendor is not in default of any agreement or other instrument to
which it is a party;
(j) it is agreed that no Contingency Revenues, of any kind, shall be
claimed by the Vendor as receivables and any that are received are for
the benefit of the Purchaser;
(j) there are no unpaid salaries, bonuses or other remuneration owing to
employees, consultants, officers, or directors (except in the ordinary
course of business and at the regular rate of salary or other
remuneration);
(j) there is no suit, claim, action, proceeding or investigation
("Litigation") pending or threatened in writing against Vendor, and,
to the knowledge of
17
Vendor, Xxxxx and the Shareholder, there is no basis for such a suit,
claim, action, proceeding or investigation. Vendor is not subject to
any outstanding order, writ, injunction or decree which, insofar as
can be reasonably foreseen, individually or in the aggregate, in the
future would have an adverse effect on Vendor, the Business or the
Purchased Assets or would prevent Vendor from consummating the
transactions contemplated hereby. No voluntary or involuntary petition
in bankruptcy, receivership, insolvency or reorganization with respect
to Vendor, or petition to appoint a receiver or trustee of Vendor's
property, has been filed by or against Vendor, nor shall Vendor file
such a petition prior to the Closing Date or for one hundred (100)
days thereafter, and if such petition is filed by others, the same
shall be promptly discharged. Vendor has not made any assignment for
the benefit of creditors or admitted in writing insolvency or that its
property at fair valuation shall not be sufficient to pay its debts,
nor shall Vendor permit any judgment, execution, attachment or levy
against it or its properties to remain outstanding or unsatisfied for
more than ten (10) days;
(j) Except as otherwise set forth herein, neither the execution, delivery
or performance of this Agreement by Vendor nor the consummation by it
of the transactions contemplated hereby nor compliance by it with any
of the provisions hereof shall (a) conflict with or result in any
breach of any provision of its Certificate of Incorporation or Bylaws,
(b) require any filing with, or permit, authorization, consent or
approval of, any court, arbitral tribunal, administrative agency or
commission, or other governmental or other regulatory authority or
agency (each a "Governmental Entity"), or (c) result in a violation or
breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify or
cancel, or require any notice or consent under any of the terms,
conditions or provisions of any agreement or other instrument or
obligation to which Vendor is a party or by which Vendor or any of its
properties or assets may be bound.
(j) the Vendor shall allow the Purchaser to maintain the Vendor's current
telephone numbers and Yellow Page listings and will take no active
steps to have such altered;
(j) the Vendor shall obtain before the Closing Date all consents,
approvals and authorizations from governmental and public authorities
or any other person as may be required to complete the purchase and
sale herein, including without limiting the generality of the
foregoing all necessary approvals from the California Department of
Insurance;
(j) Except for the Permitted Encumbrances, Vendor owns and holds, free and
clear of any lien, charge, pledge, security interest, restriction,
encumbrance or third-party interest of any kind whatsoever, sole and
18
exclusive right, marketable title and interest in and to the Purchased
Assets, together with the exclusive right to use such records and all
customer accounts, Client Files, copies of insurance policies and
contracts in force and all files, invoices and records pertaining to
the customers, their contracts and insurance policies, and all other
information comprising the Purchased Book of Business. The Vendor has
not received notice that any program, class of business, or book of
business in place with any single insurance carrier that is included
within the Purchased Book of Business has canceled or non-renewed or
intends to cancel or non-renew.
(j) Schedule "J" annexed hereto sets forth the Vendor's Volume Reports
describing premiums and commissions with respect to each of Vendor's
appointed carriers including the Vendor's Summary Production Reports
for: A) the twelve month period ended on September 30, 2002; and B)
the nine month period ended on June 30, 2003;
(j) The name "Xxxxx Insurance Agency" is the only trade name used by
Vendor (or any subsidiary thereof) within the past three (3) years. No
party has filed a claim during the past three (3) years against Vendor
or any subsidiary thereof alleging that Vendor or any subsidiary
thereof has violated, infringed on or otherwise improperly used the
intellectual property rights of such party, or, if so, the claim has
been settled with no existing liability to Vendor or any subsidiary
thereof and, to the knowledge of Vendor and the Shareholders, neither
Vendor nor any subsidiary thereof has violated or infringed any
trademark, trade name, service xxxx, service name, patent, copyright
or trade secret held by others. The Vendor shall allow the Purchaser
to continue operating the Business under the name(s) it holds as of
and after the Closing Date;
(j) to Vendor's knowledge, Vendor's computer software included in the
Purchased Assets adequately performs as presently utilized by Vendor
in its operation of the Business, and should, for at least twelve (12)
months following the Closing Date, continue to perform in such manner
in the event that Purchaser elects to continue utilizing such software
beyond the Closing Date. Vendor has delivered to Purchaser
substantially complete and correct copies of all user and technical
documentation issued to Vendor by the software producers related to
such software;
(e) other than as set forth herein, neither Vendor, Xxxxx nor the
Shareholder is a party to any non-competition or other agreement that
restricts Vendor's, Xxxxx' or the Shareholder's ability to compete in
the insurance agency industry or solicit specific insurance accounts;
(e)
(w) to Vendor's knowledge, Vendor has not incurred any liability or taken
or failed to take any action that may reasonably be expected to result
in a
19
liability for errors or omissions in the conduct of the Business,
except such liabilities as are fully covered by insurance (other than
deductibles). Vendor has errors and omission (E&O) insurance coverage
in force, with minimum liability limits of $3,000,000.00 million per
occurrence and $3,000,000.00 million aggregate, and a deductible of
$10,000.00 per occurrence;
(x) Vendor and its predecessors and affiliates have complied with all
Environmental, Health, and Safety Laws, and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand,
or notice has been filed or commenced against it alleging any failure
so to comply. Without limiting the generality of the preceding
sentence, each of Vendor and its predecessors and affiliates has
obtained and been in compliance with all of the terms and conditions
of all permits, licenses, and other authorizations that are required
under, and has complied with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations,
Schedules, and timetables that are contained in, all Environmental,
Health, and Safety Laws;
(y) Vendor has no liability (and none of Vendor and its predecessors and
affiliates has handled or disposed of any substance, arranged for the
disposal of any substance, exposed any employee or other individual to
any substance or condition, or owned or operated any property or
facility in any manner that could form the basis for any present or
future action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand against Vendor giving rise to any
liability) for damage to any site, location, or body of water (surface
or subsurface), for any illness of or personal injury to, any employee
or other individual, or for any reason under any Environmental,
Health, and Safety Law;
(y) There are no outstanding material powers of attorney executed on
behalf of Vendor;
(y) Employee Benefit Plans:
i) The only employee benefit plans (defined as any plan, program,
policy, practice, contract, agreement or other arrangement
providing for compensation, severance, termination pay,
performance awards, stock or stock-related awards, fringe
benefits or other employee benefits of any kind, whether formal
or informal, proposed or final, funded or unfunded, and whether
or not legally binding, including without limitation, any
"Employee Benefit Plan" within the meaning of Section 3(3) of
ERISA) which the Vendor currently maintains or to which the
Vendor currently contributes are the Health Insurance Plan
(administered by Blue Cross of California), the Long Term
Disability Plan (administered by Unum) and the Profit Sharing
Plan (administered by Xxxxxxx Pension Services)
20
(each a "Vendor Plan" and collectively, the "Vendor Plans").
Vendor maintains no other employee benefit plans. Each of the
Vendor Plans (and each related trust, insurance contract, or
fund) complies in form and have been operated and administered in
all material respects in accordance with their respective terms
and applicable law, including, without limitation, ERISA and the
Code;
ii) All contributions (including all employer contributions and
employee salary reduction contributions) that are due have been
paid to each Vendor Plan that is an "Employee Pension Benefit
Plan" (as defined in Section 3(2) of ERISA);
iii) Each Vendor Plan that is an Employee Pension Benefit Plan has
received a determination letter from the Internal Revenue Service
to the effect that it meets the requirements of Code Section
401(a);
iv) The Vendor does not participate currently and has never
participated in, and is not required currently and has never been
required to contribute to or otherwise participate in any plan,
program, or arrangement subject to Title IV of ERISA;
v) The Vendor does not maintain currently and has never maintained,
and is not required currently and has never been required to
contribute to or otherwise participate in any Multiemployer Plan
(as defined in ERISA Section 3(37));
vi) No action, suit, proceeding, hearing, or investigation with
respect to the administration or the investment of the assets of
any Vendor Plan (other than routine claims for benefits) is
pending;
vii) No individual (i) who has experienced a "qualifying event," as
that term is defined in Code Section 4980B(f)(3), and (ii) who
either was an employee of Vendor or is a dependent or spouse of a
current or former employee of Vendor, is currently covered by a
health plan of Vendor pursuant to Code Section 4980B or Part 6 of
Title I of ERISA;
(bb) Vendor has no knowledge of any material liability relating to the
Business or the Purchased Assets (and to Vendor's knowledge, there is
no basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against it giving
rise to any liability), except for (a) liabilities set forth on the
face of the balance sheet included in the Most Recent Financial
Statements and the notes to the Financial Statements for the Most
Recent Fiscal Year End, (b) the Assumed Contracts and contracts and
agreements not assumed by Purchaser, (c) the deductibles for claims
covered by insurance, and (d) liabilities that have arisen after the
Most Recent Fiscal Month End in the ordinary course of business (none
of which results from, arises out of, relates to, is in the nature of,
or was caused by any breach of contract, breach of warranty, tort,
infringement, or violation of law);
(cc) at the Effective Date of this agreement and at the Closing Date there
has not been and
21
shall not have been any material adverse change in the nature, volume
or profitability of the Business nor has there been nor will there by
any development or threatened or probable development which to the
best of the knowledge of the Vendor would or will have any materially
adverse effect upon the Business or the Purchased Assets. From the
Effective Date hereof to and including the Closing Date the Vendor
shall retain, conduct and maintain the Business and properly keep,
repair, and maintain or insure the Purchased Assets, at its own cost
and expense so that upon the closing of the transaction herein
contemplated the Purchaser shall have and enjoy the Purchased Assets
and the Business as a going concern without any material loss of
Goodwill, customers, contracts, licenses or depreciation in value of
any of the physical items included in the Purchased Assets;
(dd) The Vendor or its affiliates owns the premises where the Business
operates and have agreed with the Purchaser to lease the same to the
Purchaser pursuant to the terms and conditions of the lease attached
as Schedule "C" hereto. At the Effective Date the use of the Premises
of the Business for the purpose of the conduct of the Business are and
will be in conformity with all zoning and other State and municipal
statutes, bylaws, rules, regulations and orders;
(ee) Schedule "K" annexed hereto sets forth the following information with
respect to each insurance policy (including policies providing
property, casualty, liability, and workers' compensation coverage and
bond and surety arrangements) to which Vendor has been a named insured
or otherwise the beneficiary of coverage at any time within the past
three (3) years:
i) the name, address, and telephone number of the agent;
ii) the name of the insurer, the name of the policyholder, and the
name of each covered insured;
iii) the policy number and the period of coverage;
iv) the scope (including an indication of whether the coverage was on
a claims made, occurrence, or other basis) and amount (including
a description of how deductibles and ceilings are calculated and
operate) of coverage; and
v) a description of any retroactive premium adjustments or other
loss-sharing arrangements.
To Vendor's knowledge, no cancellation, amendment or increase of
premiums with respect to such insurance is pending or threatened to
occur at or prior to the Closing Date;
(ff) prior to the Closing Date, the Vendor shall permit the Purchaser and
its employees, agents, counsel and accountants or other
representatives, without interference to the ordinary conduct of the
Business, to have reasonable access during normal business hours to
the Business and to all the books, accounts, records, agreements,
contracts, documents, instruments and other data of the Vendor
(including, without limitation, all corporate,
22
business and accounting records of the Vendor) with respect to the
Vendor, the Business and the Purchased Assets, and the Vendor shall
furnish to the Purchaser such financial and operating data,
agreements, contracts, documents, instruments, and other materials and
information with respect to the Business and the Purchased Assets as
the Purchaser shall from time to time reasonably request. Until the
Closing Date, and in the event of the termination of this Agreement as
provided for herein without consummation of the transaction, the
Purchaser will take the same care to protect any confidential
information obtained from the Vendor as it takes to guard its own
confidential information of a similar nature. The Purchaser may
disclose such information as required by law but when requested by the
Vendor will attempt to have the information kept confidential to the
extent possible under applicable law. If this Agreement is so
terminated, promptly after such termination, all documents, work
papers and other written material (including all copies thereof)
obtained from a Party in connection with this Agreement shall be
returned to the Party who provided such material;
(gg) Vendor shall give any notices to third parties, and Vendor shall use
its commercially reasonable best efforts to obtain any third party
consents, that Purchaser may request in connection with the Assumed
Contracts. Vendor and Purchaser shall give any notices to, make any
filings with, and use their commercially reasonable best efforts and
cooperate with one another to obtain any authorizations, consents, and
approvals of governments and governmental agencies. Without limiting
the generality of the foregoing, each of the parties shall file any
Notification and Report Forms and related material that it may be
required to file with the Federal Trade Commission and shall use its
commercially reasonable best efforts to obtain an early termination of
the applicable waiting period, and shall make any further filings
pursuant thereto that may be necessary, proper, or advisable in
connection therewith;
(hh) At reasonably mutually agreeable times, Vendor will permit Purchaser
to meet with its employees. Vendor shall be responsible for compliance
with the requirements of Code Section 4980B and Part 6 of Title I of
ERISA for all of Vendor's employees. Subject to Article 6.00 hereof,
Vendor shall indemnify and hold Purchaser harmless for any liability
Purchaser incurs at any time on or after the Closing Date under the
provision of Code Section 4980B and Part 6 of Title I of ERISA with
respect to any of Vendor's employees;
(ii Intellectual Property
i) Vendor owns or has the right to use pursuant to license,
sublicense, agreement, or permission all Intellectual Property
necessary or desirable for the operation of the Business as
presently conducted. Each item of Intellectual Property owned or
used by Vendor in connection with
23
the Business immediately prior to the Effective Date hereunder
shall be owned or available for use by the Purchaser on identical
terms and conditions immediately subsequent to the Effective Date
hereunder;
24
ii) To the knowledge of Vendor, Vendor has not interfered with,
infringed upon, misappropriated, or otherwise come into conflict
with any Intellectual Property rights of third parties, and, to
Vendor's knowledge, Vendor has never received any charge,
complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation, or violation
(including any claim that Vendor must license or refrain from
using any Intellectual Property rights of any third party). To
the knowledge of Vendor, no third party has interfered with,
infringed upon, misappropriated, or otherwise come into conflict
with any Intellectual Property rights of Vendor; and
iii) To the knowledge of Vendor, Vendor shall not interfere with,
infringe upon, misappropriate, or otherwise come into conflict
with, any Intellectual Property rights of third parties as a
result of the continued operation of the Business as presently
conducted;
(jj) Schedule "N" annexed hereto sets forth a true and complete copy of the
Vendor's list of carrier appointments with a B+ or higher rating;
(kk) the Vendor will use its best efforts both prior to the Closing Date
and thereafter to aid the Purchaser in its acquisition of the Carrier
Appointments; and
(ll) none of the foregoing representations and statements of fact contains
any untrue statement of a material fact or omits to state any material
fact necessary to make any such statement or representation not
misleading to a prospective purchaser of the Purchased Assets seeking
full information as to the Vendor, and its respective properties,
businesses and affairs.
4.03 The representations, warranties and covenants contained in 4.02 are
provided to and for the exclusive benefit of the Purchaser and a breach of
any one or more of the representations, warranties and covenants may be
waived by the Purchaser without prejudice to his right in respect to any
other breach of the same or any other representations, warranties or
covenants; and the representations, warranties and covenants contained in
this section shall survive execution hereof and the closing of this
Agreement and same shall continue in full force and effect for a period of
three (3) years from the Closing Date.
4.04 Each of the parties represents, as to itself, its subsidiaries and its
affiliates, that no agent, broker, investment banker, financial advisor, or
other firm or person is or shall be entitled to any broker's or finder's
fee or any other commission or similar fee in connection with any of the
transactions contemplated by this Agreement, and each of the parties agrees
to indemnify and hold the others harmless from and against any and all
claims, liabilities, or obligations with respect to any fees, commissions,
or expenses asserted by any person on the basis of any act or statement
alleged to have been made by such party or its affiliate.
4.05 The Purchaser and Xxxxx agree to execute and deliver on or before the
Closing Date the
25
employment agreement in form and substance set forth in Schedule "G"
attached hereto, and the non-competition agreements in form and substance
as set forth in Schedule "F" attached hereto.
4.06 The Purchaser, the Shareholder and Xxxxx agree to execute and deliver on or
before the Closing Date the non-competition agreements in form and
substance as set forth in Schedule "F" attached hereto.
4.07 The parties hereby acknowledge and agree that the Purchaser is not assuming
and shall not be liable or responsible for any of the liabilities, debts or
obligations (known or unknown, present or contingent) of the Vendor or the
Business existing at or accruing for or during the period prior to the
Effective Date, whether or not relating to the Business, except as
specifically provided in this Agreement.
5.00 - TO BE PERFORMED AT CLOSING
5.01 On or before the Closing Date the Vendor shall execute and deliver to the
Purchaser all such bills of sale, assignments, instruments of transfer,
assurances, consents and other documents as shall be necessary to
effectively transfer to the Purchaser good and marketable title to all the
Purchased Assets, and shall deliver up to the Purchaser possession of the
Purchased Assets. The Vendor shall cooperate with the Purchaser, at such
time or thereafter, in effecting such registrations, recordings and filings
with insurance companies and public authorities as may be required in
connection with the transfer of ownership to the Purchaser of the Purchased
Assets. Specifically, the Vendor shall deliver, or cause to have delivered,
the following documents to the Purchaser all in a form satisfactory to the
Purchaser and its counsel:
(a) Certified resolutions of the Directors of the Vendor and of all its
shareholders adopting, approving and consenting to the sale of the
Purchased Assets as contemplated herein;
(b) A certificate of a director or officer of the Vendor stating that all
of the Purchased Assets are owned by the Vendors and are free and
clear of all encumbrances save and except for the Permitted
Encumbrances;
(c) An Opinion of Counsel for the Vendor and the corporate Vendors in
accordance with paragraph 7.01(i);
(d) An updated financial statement for the Vendor to the Closing Date or,
at the Purchaser's option, as near to the Closing Date as reasonably
possible;
(e) a xxxx of sale covering and transferring the Purchased Assets to the
Purchaser in a form satisfactory to the Purchaser and its counsel;
(f) a lease agreement relating to the Premises in the form attached as
Schedule "C" hereto executed by the landlord set forth therein;
26
(g) an assignment of the Vendors current telephone numbers and Yellow Page
advertisements and listings related to the Business;
(h) an assignment of the Vendor's trade name of "Xxxxx Insurance Agency";
(i) an executed employment agreement in respect of Xxxxx in the form as
set forth in Schedule "G";
(j) executed non-competition agreements (in substantially the same form as
that set forth in Schedule "F" attached hereto) from the Vendor, Xxxxx
and the Shareholder;
(k) an officer's certificate of the Vendor in accordance with paragraph
7.01(a) hereof;
(l) assignments of the Assumed Contracts assumed by the Purchaser
hereunder, provided that to the extent that any such assignment
require any third party consent or approval which has not been
obtained on or prior to the Closing Date, the Vendor will hold the
benefit of such lease or contract in trust for the sole and exclusive
use and benefit of the Purchaser until such consent or approval is
obtained or until the termination of such lease or contract and the
Purchaser will hold Vendor harmless for any failure of Purchaser to
fully perform and discharge any such accepted lease or contract from
and after the Closing Date;
(m) evidence satisfactory to the Purchaser that all Taxes have been paid
up to and including the Effective Date;
(n) all current and active insurance company statistics including premium
volumes and loss ratios;
(o) a certificate to the effect that the Vendor is not a "foreign person"
pursuant to United States Treasury Regulation 1.1445-2(b);
(p) an executed Agency Agreement in the same form as that set forth in
Schedule "P" attached hereto.
(q) a copy of the Escrow Agreement executed by the Vendor, or his agent(s)
and the Escrow Agent;
(r) a Certificate of Incumbency of the Vendor;
(s) a Certificate from a trustee of the Shareholder setting forth all of
the trustees and beneficiaries of the Shareholder; and
(t) a Receipt for the Down Payment from the Vendor.
5.02 On the Closing Date the Purchaser shall deliver the following documents to
the Vendor's counsel or the Escrow Agent, as the case may be:
(a) The Down Payment by way of a certified cheque to be delivered to the
Vendor's counsel;
(b) a Resolution of the Directors of the Purchaser adopting, approving and
consenting
27
to the purchase of the Purchased Assets as contemplated herein to be
delivered to the Vendor's counsel;
(c) A certified cheque or money order in the amount of $1,397,750.00 in
respect of the Initial Deposit shall be delivered to the Escrow Agent;
(d) The Promissory Note (attached as Schedule "O" hereto) for the Final
Payment executed by the Purchaser shall be delivered to the Escrow
Agent and dealt with by the Escrow Agent in accordance with paragraph
3.04 herein;
(e) a copy of the Escrow Agreement executed by the Purchaser, or his
agent(s), to be delivered to the Escrow Agent and the Vendor's
counsel; and
(f) a Receipt for the Initial Deposit executed by the Escrow Agent shall
be delivered to the Vendor's counsel.
5.03 All books, records and documents in the possession of the Vendor relating
to the Business shall be delivered to the Purchaser on the Closing Date and
shall be deemed to have become the property of the Purchaser on the
Effective Date except to the extent required by law to be retained by the
Vendor in which case they shall be made available by the Vendor to the
Purchaser and its authorized representatives for inspection and copying, at
the Purchaser's sole expense, but without any charge from the Vendor for
providing such copies.
5.04 The parties agree as follows with respect to the period following the
Closing Date:
d) Vendor acknowledges and agrees that from and after the Effective Date
the Purchaser shall be entitled to possession of all documents, books,
records (including Tax records), agreements, and financial data of any
sort relating to the Purchased Assets and the Business.
e) If and for so long as any party actively is contesting or defending
against any action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand in connection with (i) any transaction
contemplated under this Agreement or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence,
event, incident, action, failure to act, or transaction on or prior to
the Effective Date involving the Purchased Assets, the Business or the
obligations and liabilities assumed hereunder, the other party shall
cooperate with the contesting or defending party and its counsel in
the contest or defense, make available its personnel, and provide such
testimony and access to its books and records as shall be necessary in
connection with the contest or defense, all at the sole cost and
expense of the contesting or defending party (unless the contesting or
defending party is entitled to indemnification therefor under Article
6.00 hereof).
f) Vendor shall not take any action that is designed or intended to have
the effect of discouraging any lessor, licensor, customer, supplier,
insurance carrier, or other business associate of Vendor from
maintaining the same business relationships with Purchaser after the
Effective Date as it maintained with Vendor prior to the Effective
Date. Vendor shall to refer all customer inquiries relating to the
Business to Purchaser from and after the Closing Date.
5.05 Consents To Assignment.
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(a) Notwithstanding anything in this Agreement to the contrary, this
Agreement shall not constitute an agreement to assign any contract,
lease, license or agreement of any claim or right or any benefit
arising thereunder or resulting therefrom if an attempted assignment
thereof, without the consent of a third party thereto, would
constitute a breach thereof.
(b) If any such consent is not obtained prior to the Closing Date, Vendor
and Purchaser shall cooperate (at their own expense) in any lawful and
reasonable arrangement under which Purchaser shall obtain the economic
claims, rights and benefits under the asset, claim or right with
respect to which the consent has not been obtained in accordance with
this Agreement, including subcontracting, sublicensing or subleasing
to Purchaser and enforcement of any and all rights of Vendor against
the other party thereto arising out of a breach or cancellation
thereof by the other party.
5.06 From time to time after the Closing Date, at the Purchaser's request, the
Vendor shall execute, acknowledge and deliver to the Purchaser such other
instruments of conveyance and transfer and shall take such other actions
and execute and deliver such other documents, certifications and further
assurances as the Purchaser may reasonably request in order to vest more
effectively in the Purchaser, or to put the Purchaser more fully in
possession of, any of the Purchased Assets. Each of the parties hereto
shall cooperate with the others and execute and deliver to the other
parties such other instruments and documents and take such other actions as
may be reasonably requested from time to time by any other party hereto as
necessary to carry out, evidence and confirm the intended purposes of this
Agreement.
6.00 - INDEMNITY
6.01 Survival Of Representations, Warranties, Indemnities And Covenants.
(a) Subject to paragraph 6.01(b), the representations, warranties,
covenants and indemnities set forth in this Agreement shall survive
for a period of three (3) years from the Closing Date. If a party has
received notice of a potential breach of a representation, warranty or
covenant, or an otherwise indemnifiable event under this Article 6.00,
within such three year period, it may preserve its right to assert a
later claim for damages caused by such breach by delivering written
notice of the breach (which shall specify the nature of the breach
with reasonable factual detail to the extent then in the possession of
such party) to the breaching party within ninety (90) days after such
three (3) year period. All post-closing covenants shall survive the
Closing Date for the period(s) specified in this Agreement or, if not
specified, for a period of three (3) years following the Closing Date;
(b) Notwithstanding anything set forth in paragraph 6.01(a); (i) to the
extent and only to the extent that the indemnification provisions of
paragraph 6.02(a)(ii) apply to Adverse Consequences that result from,
arise out of, relate to, or are caused by errors or omissions which
(A) occurred on or prior to the Effective Date and (B) result in a
loss after renewal of a policy by Purchaser after the Effective Date,
29
such provisions shall survive for a period of one (1) year, rather
than three (3) years, from the Closing Date; and (ii) all
representations, warranties, covenants and indemnities in connection
with any tax liabilities of Vendor, Xxxxx, the Trustees or the
Shareholder shall survive in perpetuity (subject to any applicable
statutes of limitation).
6.02 Indemnification Provisions For The Benefit Of The Purchaser
(a) From and after the Effective Date, the Vendor, Xxxxx and the
Shareholder agree, jointly and severally, to indemnify and hold
Purchaser and its officers, directors, and affiliates harmless from
and against any Adverse Consequences any of such parties may suffer or
incur, to the extent that they result from, arise out of, relate to,
or are caused by (i) the breach of any of Vendor's, Xxxxx' or the
Shareholders' representations, warranties, obligations or covenants
contained herein, or (ii) the operation of the Business or the
ownership of the Purchased Assets by Vendor on or prior to the Closing
Date, including, without limitation, any claims or lawsuits based on
conduct of Vendor, Xxxxx or the Shareholder occurring before the
Closing Date;
(b) In addition to and without limiting the foregoing, Vendor, Xxxxx and
the Shareholder, jointly and severally, agree, from and after the
Effective Date, to indemnify Purchaser from and against the entirety
of any Adverse Consequences Purchaser may suffer resulting from,
arising out of, relating to, in the nature of, or caused by:
(iv) any liability or obligation of Vendor that is not assumed
hereunder (including any liability of Vendor that becomes a
liability of Purchaser under any bulk transfer law of any
jurisdiction, under any common law doctrine of de facto merger or
successor liability, or otherwise by operation of law); or
(v) any liability of Vendor for the unpaid taxes of any person or
entity (including Vendor) under United States Treasury Regulation
1.1502-6 (or any similar provision of state, local, or foreign
law), as a transferee or successor, by contract, or otherwise.
6.03 From and after the Closing Date, Purchaser agrees to indemnify and hold
Vendor, Xxxxx, the Trustees and the Shareholder and their respective
officers, directors, shareholders and affiliates harmless from and against
any Adverse Consequences any of such parties may suffer or incur, to the
extent they result from, arise out of, relate to, or are caused by (a) the
breach of any of Purchaser's obligations or covenants contained herein, (b)
the operation of the Business or ownership of the Purchased Assets by
Purchaser after the Closing Date, including, without limitation, any claims
or lawsuits based on conduct of Purchaser occurring after the Closing Date,
or (c) liabilities and obligations of Vendor assumed by Purchaser
hereunder.
6.04 Matters Involving Third Parties:
(a) If any third party shall notify any party (the "Indemnified Party")
with respect to
30
any matter (a "Third Party Claim") that may give rise to a claim for
indemnification against the other party (the "Indemnifying Party")
under this Article 6.00, then the Indemnified Party shall promptly
notify (which the Indemnified Party will endeavor to provide, by the
sooner to occur of (i) fifteen (15) business days after receipt of
notice by it or (ii) five (5) days prior to the date a responsive
pleading is due) the Indemnifying Party thereof in writing; Provided,
however, that no delay on the part of the Indemnified Party in
notifying the Indemnifying Party shall relieve the Indemnifying Party
from any obligation hereunder unless (and then solely to the extent)
that the Indemnifying Party thereby is prejudiced;
(b) The Indemnifying Party shall have the right to defend the Indemnified
Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (i) the
Indemnifying Party notifies the Indemnified Party in writing within
fifteen (15) days after the Indemnified Party has given notice of the
Third Party Claim that the Indemnifying Party shall indemnify the
Indemnified Party from and against the entirety of any Adverse
Consequences the Indemnified Party may suffer resulting from, arising
out of, relating to, in the nature of, or caused by the Third Party
Claim, (ii) the Indemnifying Party provides the Indemnified Party with
evidence reasonably acceptable to the Indemnified Party that the
Indemnifying Party shall have the financial resources to defend
against the Third Party Claim and fulfill its indemnification
obligations hereunder, (iii) the Third Party Claim involves only money
damages and does not seek by way of a motion an injunction or other
equitable relief, (iv) settlement of, or an adverse judgment with
respect to, the Third Party Claim is not, in the good faith judgment
of the Indemnified Party, likely to establish a precedential custom or
practice materially adverse to the continuing business interests of
the Indemnified Party, and (v) the Indemnifying Party conducts the
defense of the Third Party Claim actively and diligently;
(c) So long as the Indemnifying Party is conducting the defense of the
Third Party Claim in accordance with paragraph 6.04(b) above, (i) the
Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third Party Claim, (ii)
the Indemnified Party shall not consent to the entry of any judgment
or enter into any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnifying Party, and (iii)
the Indemnifying Party shall not consent to the entry of any judgment
or enter into any settlement with respect to the Third Party Claim
without the prior written consent of the Indemnified Party;
(d) If any of the conditions in paragraph 6.04(b) above is or becomes
unsatisfied, however, (i) the Indemnified Party may defend against,
and consent to the entry of any judgment or enter into any settlement
with respect to, the Third Party Claim in any manner it may deem
appropriate (and the Indemnified Party need not consult with, or
obtain any consent from, the Indemnifying Party in connection
therewith), (ii) the Indemnifying Party shall reimburse the
Indemnified
31
Party promptly and periodically (but no more frequently that monthly)
for the costs of defending against the Third Party Claim (including
reasonable attorneys' fees and expenses), and (iii) the Indemnifying
Party shall remain responsible for any Adverse Consequences the
Indemnified Party may suffer resulting from, arising out of, relating
to, in the nature of, or caused by the Third Party Claim to the
fullest extent provided in this Article 6.00.
6.05 From and after the Effective Date, except for remedies that cannot be
waived as a matter of law and except for injunctive relief, the rights to
indemnification under this Article 6.00 shall be the exclusive remedy for
the parties with respect to this Agreement contemplated and consummated
hereby, and the parties shall not be entitled to pursue, and each hereby
expressly waives as of the Effective Date, any and all other rights that
may otherwise be available to either of them either at law or in equity
with respect thereto. This paragraph 6.05 does not limit the remedies
available to any party under any other agreement or instrument executed in
connection with this Agreement. Notwithstanding the foregoing, nothing
contained in this paragraph 6.05 shall prevent any party hereto from
seeking and obtaining, as and to the extent permitted by applicable law,
specific performance by the other party hereto of any of its obligations
under this Agreement or injunctive relief against the other party's
activities in breach of this Agreement.
6.06 Prior to asserting any claim pursuant to this Article 6.00, each
Indemnified Party shall file, or cause to be filed, a claim with respect to
the liabilities in question under applicable insurance policies, if any,
maintained by such Indemnified Party or any subsidiary, division or
affiliate thereof. The amount of any Adverse Consequences suffered,
sustained, incurred or required to be paid to or for the benefit of any
Indemnified Party shall be reduced by the amount of (a) any insurance
proceeds and other amounts paid to or for the benefit of the Indemnified
Party with respect to such Adverse Consequences by any person not a party
to this Agreement or (b) any income or tax benefits actually received by or
for the benefit of the Indemnified Party or any Affiliate of any
Indemnified Party.
6.07 The Indemnifying Party shall pay to the Indemnified Party in cash the
amount of any Adverse Consequence to which the Indemnified Party may become
entitled by reason of the provisions of this Article 6.00, such payment to
be made within fifteen (15) days after such Adverse Consequences are
finally determined either by mutual agreement of the parties hereto or
pursuant to the final unappealable judgment of a court of competent
jurisdiction.
7.00 - CONDITIONS PRECEDENT
7.01 The obligations of the Purchaser to complete the purchase of the Purchased
Assets hereunder shall be subject to the satisfaction of, or compliance
with, at or before the Closing Date, each of the following conditions
precedent (each of which is hereby acknowledged to be inserted for the
exclusive benefit of the Purchaser and may be waived by it in whole or in
part):
32
(a) all of the representations, warranties and covenants of the Vendor,
Xxxxx and the Shareholder herein contained shall be true and correct
in all material respects at the Closing Date and with the same effect
as if made at and as of the Closing Date and the Vendor shall have
delivered to the Purchaser a certificate of an officer of the Vendor,
confirming, to the best of the knowledge of such person, the truth and
correctness in all material respects of such representations,
warranties and covenants;
(b) all instruments of conveyance and other documentation relating to the
sale and purchase of the Purchased Assets, including without
limitation, assignments of contracts and agreements (and third party
consents thereto, where required), bills of sale, documentation
relating to the due authorization and completion by the Vendor of the
sale of the Purchased Assets and the taking of all actions and
proceedings on or prior to the Closing Date in connection with the
performance by the Vendor of its obligations under this Agreement,
shall be satisfactory to the Purchaser and counsel for the Purchaser
and shall have been delivered to the Purchaser and the Purchaser shall
have received copies of all such other documentation or evidence as
the Purchaser may reasonably request in order to establish the
consummation of the transactions contemplated hereby and the taking by
the Vendor of all necessary corporate proceedings in connection
herewith in compliance with the terms and conditions hereof, in form
(as to certification and otherwise) and substance satisfactory to the
Purchaser and counsel for the Purchaser;
(c) All actions to be taken by Vendor, Xxxxx and the Shareholder in
connection with consummation of the transactions contemplated hereby
and all certificates, opinions, instruments, and other documents
required to effect the transactions contemplated hereby shall be
reasonably satisfactory in form and substance to Purchaser.
(d) as at the Closing Date there shall not have been material adverse
damage or change to the Purchased Assets or the Business;
(e) the Vendor shall have delivered to the Purchaser physical possession
to all of the Purchased Assets, all keys, combinations to safes,
miscellaneous title documents and any and all other items or indicia
of title to enable it to assume full, complete and unencumbered
operation of the Business and possession of the Purchased Assets;
(f) the Vendor shall have executed and delivered the Lease Agreement
attached hereto as Schedule "C";
(g) the Vendor, Xxxxx and the Shareholder shall have executed and
delivered the Non-Competition Agreement attached hereto as Schedule
"F";
(h) the Purchaser shall have been satisfied that the leased premises are
satisfactory for
33
the purposes intended in carrying on the Business;
(i) the Vendor's counsel shall deliver to the Purchaser's counsel, on the
Closing Date, a legal opinion of the Vendor's counsel in a form
satisfactory to the Vendor's counsel and the Purchaser's counsel, each
acting reasonably;
(j) Purchaser shall have completed its due diligence investigation with
respect to Vendor including, but not limited to, (i) business,
financial, operational, customer, worker's compensation, and employee
due diligence, with results satisfactory to Purchaser in its sole
discretion, and (ii) its legal and regulatory due diligence, with
results satisfactory to Purchaser in its commercially reasonable
discretion;
(k) approval by the directors of the Purchaser and Xxxxxxx Xxxxx
International Insurance Brokers Ltd. (the parent company of the
Purchaser) of this Agreement and the transactions contemplated herein;
(l) the receipt of all necessary approvals in favor of the Purchaser of
all insurance approvals and insurance licence matters from the
California Department of Insurance;
(m) delivery to and satisfactory review by the Purchaser of the rating of
the insurance carriers;
(n) receipt by the Purchaser of insurance carrier and wholesaler
confirmation of commission revenue from the Business for the most
recent 12 month period;
(o) Vendor shall have executed and delivered to Purchaser a certificate to
the effect that it is not a "foreign person" pursuant to United States
Treasury Regulation 1.1445-2(b);
(p) Satisfactory review and approval by the Purchaser of all Vendor Plans
currently offered to the employees of the Vendor;
(q) the receipt by the Purchaser of errors and omissions insurance,
property and casualty insurance and all necessary business licences
required by the Purchaser in order to operate the Business; and
(r) the Vendor shall have executed and delivered the Agency Agreement
attached hereto as Schedule "P".
7.02 In addition to the foregoing, the obligations of the Purchaser to complete
the purchase of the Purchased Assets hereunder shall be subject to the
acquisition by the Purchaser of any and all regulatory or stock exchange
approvals necessary for the purchase of the Purchased Assets. Should this
condition not be met by the Closing Date (if the time limitation has not
been extended by agreement in writing by both Parties hereto) then this
Agreement shall terminate and shall be considered to be null and void ab
initio; and
34
7.03 In case any of the foregoing conditions not being fulfilled on or before
the Closing Date or if any of the foregoing said conditions are not
satisfactory, for any reason at all, in the opinion of the Purchaser, then
in any such event, the Purchaser may rescind this Agreement upon written
notice to the Vendor and thereupon shall be released from all obligations
hereunder.
7.04 Risk of loss or damage to the Purchased Assets shall be that of the Vendor
until the Closing Date. If any loss or damage to the Purchased Assets shall
occur prior to such time and if such loss or damage is material, the
Purchaser may at its option cancel this Agreement at any time prior to
completion of the Closing.
7.05 The obligations of Vendor, Xxxxx and the Shareholder to effect the
transactions contemplated by this Agreement to occur on the Closing Date
are subject to the satisfaction of the following conditions on or prior to
the Closing Date, unless waived by Vendor or the Shareholder:
a) The representations and warranties of Purchaser set forth in this
Agreement shall be true and correct in all material respects as of the
Closing Date, except for such representations and inaccurate
warranties as will not, singly or in the aggregate, be reasonably
expected to have a material adverse effect on Purchaser;
b) Purchaser shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or
prior to the Closing Date;
c) Purchaser shall have executed and delivered to Xxxxx for execution the
employment agreement in form and substance as set forth in Schedule
"G" attached hereto; and
d) All actions to be taken by Purchaser in connection with consummation
of the transactions contemplated hereby and all certificates,
opinions, instruments and other documents required to effect the
transactions contemplated hereby shall be reasonably satisfactory in
form and substance to Vendor, acting reasonably.
8.00 - GENERAL
8.01 In this agreement words importing the singular shall include the plural and
words importing the masculine shall include the feminine or neuter, or vice
versa, as the context, or the number of or gender of the parties, from time
to time so requires. Words importing persons shall include corporations,
companies, partnerships, syndicates, trusts and any number or aggregate of
persons.
8.02 This Agreement shall be governed by and construed and enforced in
accordance with internal Delaware law without regard to any applicable
conflicts of law, and the parties hereto agree to submit and attorn to the
jurisdiction of the Courts of Delaware in respect any disputes which may
arise hereunder.
8.03 Headings are not to be considered as part of this Agreement and are
included solely for
35
convenience of reference and are not intended to be a full or accurate
description of the text thereof.
8.04 This Agreement may be executed in two or more counterparts, each of which
shall be considered one and the same agreement, and shall become effective
when one or more counterparts have been signed by each of the parties and
delivered to the other parties, it being understood that all parties need
not sign the same counterpart.
8.05 Time shall be of the essence.
8.06 All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally, telecopied (if confirmed),
or mailed by registered or certified mail (return receipt requested), or
overnight courier service to the parties at the following addresses or at
such other address for a party as shall be specified by like notice:
To the Vendor, Xxxxx and Shareholder at: 000 Xxxxxxxx Xx.
Xxxxxxx, Xxxxxxxxxx, 00000
Attn: Xxxxxxxxx X. Xxxxx Xx.
To the Purchaser at: 355, 00000 Xxxxxxxxx Xxxx, XX
Xxxxxxx, Xxxxxxx, X0X 0X0
Attn: Primo Podorieszach
Any party may change the address to which notices, requests, demands,
claims, and other communications hereunder are to be delivered by giving
the other party notice in the manner herein set forth.
8.07 Each party shall, at the request of any party, from time to time and at all
times hereafter, execute and deliver all deeds, documents in writing and do
all acts and things as may be required to carry out the true intended
meaning of this Agreement.
8.08 This Agreement shall constitute and be the entire and final agreement by
their hands or the hands of their authorized officers, between the parties
hereto with respect to all matters herein.
8.09 This Agreement (including the documents and instruments referred to herein)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to
the subject matter hereof.
8.10 Where a period of time is prescribed or calculated from a day of event the
time shall be calculated excluding such day or the day of such event,
unless a contrary attention appears. Where the time for doing anything
falls or expires on a Saturday, Sunday or on a public holiday then such
thing may be validly done the first date thereafter that is not a Saturday,
Sunday or holiday.
8.11 No amendment of any provision of this Agreement shall be valid unless the
same shall be in writing and signed by the parties hereto. Vendor may
consent to any such amendment for itself at any time prior to the Closing
date without the prior authorization of its Board
36
of Directors or the Shareholder. No waiver by any party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent
such occurrence.
8.12 Neither this Agreement nor any of the rights, interests, or obligations
hereunder shall be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the
other parties. This Agreement shall be binding upon, inure to the benefit
of, and be enforceable by the parties and their respective successors and
assigns.
8.13 If any provision or covenant, or any part thereof, of this Agreement should
be held by any court to be illegal, invalid or unenforceable, either in
whole or in part, such illegality, invalidity or unenforceability shall not
affect the legality, validity or enforceability of the remaining provisions
or covenants, or any part thereof, all of which shall remain in full force
and effect. The fact that specific dollar amounts are used herein as
thresholds for disclosure, indemnification obligations or otherwise is not
intended to be, and shall not in any way be interpreted to be considered a
"material" amount relative to the Purchased Assets or the Business, but
rather is a separate amount agreed upon by the parties for the particular
purpose for which it is used.
8.14 The prevailing party in any proceeding brought to enforce the terms of this
Agreement shall be entitled to an award of reasonable attorneys' fees and
costs incurred in investigating and pursuing such action, both at the trial
and appellate levels.
8.15 Each of the parties acknowledges and agrees that the other party would be
damaged irreparably if any of the provisions of this Agreement are not
performed in accordance with their specific terms or otherwise are
breached. Accordingly, each of the parties agrees that the other party
shall be entitled to an injunction or injunctions to prevent breaches of
the provisions of this Agreement and to enforce specifically this Agreement
and the terms and provisions hereof in any action instituted in any court
of the United States or any state thereof having jurisdiction over the
parties and the matter in addition to any other remedy to which it may be
entitled, at law or in equity.
8.16 Vendor warrants and agrees to pay and discharge when due all claims of
creditors that could be asserted against Purchaser by reason of
non-compliance with the provisions of any bulk transfer laws of any
jurisdiction in connection with the transactions contemplated by this
Agreement, and acknowledges that such liabilities and obligations are not
to be assumed by Purchaser hereunder. Vendor hereby indemnifies and agrees
to hold Purchaser harmless from, against and in respect of, and shall on
demand reimburse Purchaser for, any loss, liability, cost or expense
suffered or incurred by Purchaser by reason of the failure of Vendor to pay
or discharge any such claims.
IN WITNESS WHEREOF the parties hereto have duly executed this Agreement as to be
effective as at the date first written above.
37
ADDISON YORK INSURANCE BROKERS LTD.
Per: /s/ Primo Podorieszach
--------------------------------
XXXXX INSURANCE AGENCY, INC.
Per: --------------------------
/s/ Xxxxxxx X. Xxxxx /s/ Xxxxxxxxx X. Xxxxx Xx.
------------------------------- ------------------------------
Witness XXXXXXXXX X. XXXXX XX.
XXXXX REVOCABLE TRUST
Per: /s/ Xxxxxxxxx X. Xxxxx Xx.
--------------------------------
Xxxxxxxxx X. Xxxxx Xx. (trustee)
Per: --------------------------------
Xxx X. Xxxxx (trustee)
38
SCHEDULE "A"
CLIENT LIST
The Vendor and the Shareholder, jointly and severally represent and warrant to
the Purchaser that the computer tape dated October 6th, 2003, delivered to the
Purchaser herewith and identified as "Applied Systems Customer List and Customer
Data", constitutes a full and complete record of the Vendors insurance clients
and their respective policies.
INITIAL -------------------
Vendor
/s/ [initials]
-------------------
Shareholder
SCHEDULE "B"
Fixed Assets
------------
SCHEDULE "C"
REAL PROPERTY LEASE AGREEMENT
OFFICE LEASE AGREEMENT
This Lease Agreement is made effective this 1st day of October, 2003, by and
between
000 Xxxxxxx Xxx Partnership
of 000 X. Xxxxxxx Xxx. Xxxxxxx, Xx., 00000
(hereafter called "LESSOR")
and
Addison York Insurance Brokers, Ltd.
of 355, 00000 Xxxxxxxxx Xxxx, XX
Xxxxxxx, Xxxxxxx, X0X 0X0
(hereafter called "LESSEE")
WITNESSETH:
That the said LESSOR hereby leases and demises unto the said LESSEE the
following described premises: 000 X. Xxxxxxx Xxx. Xxxxxxx Xx 00000, suite A & H.
From 10/01/2003, for the term of One Year and ending on 10/01/2004 (the "Term").
The said LESSEE shall pay to the LESSOR the monthly rent of $2,042.00 (the
"Basic Rent") being due on the First day of each month, which said sum has been
paid and acknowledged herein, and the remaining payments as follows: the first
of each Month throughout the Term and any renewal thereof.
1. The LESSEE hereby covenants with the LESSOR that the LESSEE will pay the rent
herein reserved at the times and in the manner aforesaid, and will pay all
charges for gas, electricity, and water used on the premises. Should said rent
or charges for gas, electricity or water herein provided for at any time remain
due and unpaid for a period of thirty days after the same shall have become due,
the said LESSOR may at LESSOR'S option, consider the said LESSEE a tenant at
sufferance and immediately re-enter upon the premises and the entire rent for
the rental period then next ensuing shall at once be due and payable and may be
immediately collected by distress or otherwise. The LESSEE will not use or
permit the premises to be used for any illegal or improper purposes, nor permit
the disturbance, noise or annoyance whatsoever, detrimental to the premises or
to the comfort of the other habitants of said building or its neighbors; and
will not sublet or assign this lease nor any part thereof without the written
consent of the LESSOR, such consent not to be unreasonably withheld.
2. The LESSEE will keep the interior or the premises, and all windows, doors,
fixtures, interior walls, pipes, and other appurtenances, in good and
substantial repair and in clean condition, damage by fire or storm and
reasonable wear and tear excepted; and will exercise all reasonable care in the
use of halls, stairs, bathrooms, closets, and other fixtures and parts of the
premises used in common with other tenants in said building which may be
necessary for the preservation of the property and the comfort of the other
tenants; and will also permit the LESSOR or LESSOR'S agents or employees, at all
reasonable times, to enter into the premises and inspect the conditions thereof,
and make such repairs as may be necessary; and will at the expiration of said
term or any renewal thereof, without demand, quietly and peaceably deliver up
the possession of the said premises in good state and condition, damage or
destruction by fire or storm or reasonable wear and tear excepted.
3. The LESSOR hereby covenants with the LESSEE upon the performance by the
LESSEE of the covenants hereinbefore set forth, that the LESSOR will, during the
continuance of said term, keep all
the external parts of the premises in good repair; that in case the said
building and premises or any part thereof, shall at any time be destroyed or so
damaged by fire or storm as to render same unfit for occupation or use, said
LESSOR shall have the option to terminate this Lease, or to repair and rebuild
the premises refunding the rents hereby reserved, or a fair and just portion
thereof, according to the damage sustained, until the said premises are repaired
and fit for occupancy and use; and that the LESSEE may quietly hold and enjoy
the premises without any interruption by the LESSOR or any person claiming under
the LESSOR.
4. The LESSEE hereby pledges and assigns to the LESSOR all furniture, fixtures,
goods and chattels of the LESSEE on the premises, as security for the payment of
the rent reserved herein and the LESSEE agrees that said lien may be enforced by
distress, foreclosure or otherwise, at the election of the LESSOR; and said
LESSEE hereby waives all rights of homestead or exemption in said furniture,
fixtures, goods and chattels to which the LESSEE may be entitled under the
Constitution and laws of this State; and in case of the failure of the LESSEE to
pay the or other charges herein reserved when due, and same is collected by suit
or through an attorney, the LESSEE agrees to pay the LESSOR reasonable
attorney's fees, together with all costs incurred. This lease shall bind the
LESSOR and the LESSEE and their respective heirs, assigns, administrators, legal
representatives and executors.
5. The parties hereto waive trail by jury and agree to submit to the personal
jurisdiction and venue of a court of subject matter jurisdiction located in Los
Angeles County, State of Claifornia. No action hereunder may be commenced if
more than one year after the cause of action giving rise thereto has elapsed.
6. LESSOR agrees to waive the requirement of a Security Deposit. Any damage not
previously reported will be repaired at LESSEE'S expense.
7. Unless specifically disallowed by law, should litigation arise hereunder,
service of process therefore may be obtained through certified mail, return
receipt requested; the parties hereto waiving any and all rights they may have
to object to the method by which service was perfected.
8. To the extent cognizable at law, the parties hereto, in the event of breach
and in addition to any and all other remedies available thereto, may obtain
injunctive relief, regardless of whether the injured party can demonstrate that
no adequate remedy exists at law.
9. Subject to the further provisions of this clause, should the LESSEE have
complied with all of the covenants and conditions as in this Lease contained,
the LESSEE shall have the option to extend the term hereof for four additional
terms of one (1) year each and, if exercised by the LESSEE, shall be upon the
same terms and conditions as in this Lease contained, except as to the right to
renew, which is restricted to four additional terms of one (1) year, and save as
to the rentals herein provided for. All subsequent options shall expire in the
event that the first option is not exercised. The conditions preliminary to the
LESSEE exercising its option to renew are as follows:
a) that the LESSEE has not defaulted in any of the provisions contained
in this Lease covering the initial term or, any subsequent renewal
thereof;
b) that the each renewal term shall be upon the same terms, covenants and
conditions as in this Lease provided with respect to the initial term
of this Lease except that the Basic Rent of such renewal terms shall
be as follows:
1) in the first renewal term the Basic Rent shall be $2,042.00 per
month;
2) in the second renewal term the Basic Rent shall be $2,042.00 per
month;
3) in the third renewal term the Basic Rent shall be the market rate
for such premises at the time of renewal, which shall be
negotiated between the Landlord and the Tenant; and
4) in the fourth renewal term the Basic Rent shall be the market
rate for such premises at the time of renewal, which shall be
negotiated between the Landlord and the Tenant.
There shall be no further privilege or extension of this Lease beyond
the four renewal terms of one (1) year each.
c) that in the event that the LESSOR and LESSEE cannot arrive at the
Basic Rental payable during third and fourth renewal terms as
aforesaid, either party shall then be entitled to give the other
notice and demand arbitration thereof; and
d) the LESSEE shall exercise its right to extend this Lease for the
renewal terms above specified in the following manner, that is to say,
at least 30days prior to but not more that 60 days prior to the
expiration of the initial term or any subsequent renewal thereof, the
LESSEE shall notify the LESSOR in writing of its election to exercise
the right to extend the term of this Lease for the additional term as
hereinbefore specified.
Executed this 1st day of October, 2003
000 Xxxxxxx Xxx Partnership
Per: /s/ [illegible]
-----------------------------
Addison York Insurance Brokers, Ltd.
Per: /s/ Primo Podorieszach
-----------------------------
SCHEDULE "D"
ASSUMED CONTRACTS
Those agreements attached hereto and those agreements identified in the
Assignment Agreement dated October 1st, 2003, and made between the Vendor and
Purchaser.
SCHEDULE "E"
FINANCIAL STATEMENTS OF THE VENDOR
SCHEDULE "F"
FORM OF NON-COMPETITION AGREEMENTS
1. Xxxxxxxxx X. Xxxxx Xx.
2.. Xxxxx Revocable Trust
3. Xxxxx Insurance Agency, Inc.
NON-DISCLOSURE and
NON-COMPETITION AGREEMENT
THIS AGREEMENT MADE effective this 1st day of October, 2003.
BETWEEN:
ADDISON YORK INSURANCE BROKERS, LTD.
a body corporate incorporated pursuant to the laws
of the State of Delaware,
(hereinafter referred to as the "Corporation")
- and -
XXXXXXXXX X. XXXXX XX.
an individual residing in the City of Arcaidia,
in the State of California,
(hereinafter referred to as "Xxxxx")
WHEREAS the Corporation has requested an obligation of secrecy and
non-competition from Xxxxx as a condition of agreeing to the purchase of certain
assets (the "Purchased Assets") from Xxxxx Insurance Agency, Inc. in accordance
with the terms and conditions of an agreement for the sale and purchase of
assets dated effective as of the 1st day of October, 2003 (hereinafter referred
to as the "Purchase Agreement");
AND WHEREAS Xxxxx has access to Confidential Information regarding the Purchased
Assets and the Business;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the premises
and mutual covenants herein contained and in consideration of the sum of
$4,995.00 now paid by the Corporation to Xxxxx (receipt of and sufficiency of
which is hereby acknowledged) and for other good and valuable consideration the
parties hereto and hereby agree as follows:
1.00 DEFINITIONS
1.01 Defined terms used in this Agreement and not otherwise defined herein shall
have the same meaning as is ascribed to such terms in the Purchase
Agreement.
1.02 "Agreement" means this Non-Disclosure and Non-Competition Agreement and all
amendments in writing made hereto.
1.03 "Territory" means the State of California.
1.04 In this Agreement words importing the singular shall include the plural and
words importing the masculine shall include the feminine or neuter, or vice
versa, as the context, or the number of or gender of the parties, from time
to time so requires. Words
2
importing persons shall include corporations, companies, partnerships,
syndicates, trusts and any number or aggregate of persons.
2.00 OBLIGATION TO NOT COMPETE
2.01 Xxxxx hereby covenants and agrees that for a period of five (5) years after
the date that Xxxxx is not employed by the Corporation, Xxxxx will not,
directly or indirectly, within the Territory:
(a) solicit for employment any employees of the Corporation;
(b) solicit insurance-related business from any of the Corporation's
customers; or
(c) own, operate, be engaged in the operation of, or have any financial
interest in, any business operations whether a proprietorship,
partnership, joint venture or private company, or otherwise, carry on
or be engaged in any venture similar to the Business of the
Corporation.
2.02 The parties intend that the covenants contained in paragraph 2.01 shall be
construed as separate covenants, one for each subdivision to which the
covenant applies. Except for geographic coverage, each such separate
covenant shall be deemed identical in terms to the covenant contained
above. In the event a court of competent jurisdiction determines that the
provisions of this covenant not to compete are excessively broad as to
duration, geographic scope or activity, it is expressly agreed that this
covenant not to compete shall be construed so that the remaining provisions
shall not be affected, but shall remain in full force and effect, and any
such over broad provisions shall be deemed, without further action on the
part of any person, to be modified, amended and/or limited, but only to the
extent necessary to render the same valid and enforceable in such
jurisdiction.
3.00 OBLIGATIONS TO NOT DISCLOSE
3.01 Xxxxx covenants and agrees with the Corporation that:
(a) the business connections, customers, Client Files, marketing, sales
techniques, financial statements, employee lists or names, procedures
and operations, and other intangible assets and aspects of the
Business have been established and maintained by the Corporation at
great expense and are protected as confidential information and trade
secrets, and are of great value to the Corporation (the "Confidential
Information"); and
(b) the Corporation would suffer great loss and injury if the Confidential
Information were disclosed or used in any way to the detriment of the
Corporation.
Therefore, Xxxxx shall not, directly or indirectly, use or disclose, or
cause or allow to be used or disclosed, to the Corporation's detriment, any
Confidential Information, secret, or proprietary information of the
Corporation. The foregoing limitation shall not apply to any Confidential
Information or proprietary information which has been voluntarily disclosed
to the public by the Corporation, independently developed and disclosed by
others, or otherwise enters the public domain through lawful means, not in
violation of the provisions of this subsection. In addition, Xxxxx hereby
covenants and agrees with the Corporation that, upon Xxxxx termination of
employment with the Corporation for any reason whatsoever, or upon demand
by the Corporation for the same, Xxxxx shall forthwith return any and all
Confidential Information in his possession to the
3
Corporation.
3.02 The obligations contained in paragraph 3.01 shall survive the termination
of any discussions, negotiations or contractual relations between Xxxxx and
the Corporation.
3.03 In the event that a dispute shall arise as to whether or not certain
information is Confidential Information, then Xxxxx shall have the burden
of proving that such information is not Confidential Information.
4.00 MISCELLANEOUS
4.01 If any covenant or provision herein is determined to be void or
unenforceable in whole or in part, it shall not be deemed to affect or
impair the enforceability or validity of any other covenant or provision of
this Agreement or any part thereof.
4.02 The Parties to this Agreement agree that a breach by Xxxxx of any of the
covenants herein contained would result in damages to the Corporation for
which the Corporation could not adequately compensated by a monetary award.
Accordingly, Xxxxx agrees that in the event of any such breach, in addition
to, and not in substitution of, all other remedies available to the
Corporation at law or in equity, the Corporation shall be entitled as a
matter of right to apply to a Court of competent jurisdiction for such
relief by way of restraining order, injunction, decree or otherwise, as may
be appropriate to ensure compliance with the provisions of this Agreement
and Xxxxx shall be liable to the Corporation for all losses, costs, legal
fees, damages and expenses whatsoever which the Corporation may sustain,
pay or incur as result of or in connection with Xxxxx failure to keep,
observe or perform, from and after the dates hereof, the covenants to be
kept, observed and performed by Xxxxx under this Agreement.
4.03 The Parties agree that all restrictions in this Agreement are necessary and
are fundamental to the protection of the Business of the Corporation and
are reasonable and valid and all defences to the strict enforcement thereof
by the Corporation are hereby waived by Xxxxx.
4.04 This Agreement shall enure to the benefit and shall be binding upon the
parties hereto together with any of their respective shareholders,
directors, officers, managers, employees, successors and assigns and where
applicable, their respective heirs, executors and administrators.
4.05 Xxxxx shall not assign, or otherwise transfer, his rights or delegate his
duties or obligations under this Agreement without the prior written
consent of the Corporation. This Agreement shall be fully assignable by the
Corporation.
4.06 This Agreement and the rights and obligations hereunder shall be governed
by and construed in accordance with the laws of the State of California.
4.07 This Agreement constitutes the entire agreement between the parties
pertaining to the
4
subject matter hereof, and supersedes all prior and contemporaneous
agreements, understandings, negotiations, and discussions of the parties,
whether oral or written, pertaining to the subject matter hereof.
4.08 No amendment or variation of the terms, conditions, warranties, covenants,
agreements and undertakings set forth herein shall be of any force or
effect unless the same shall be reduced to writing duly executed by all
Parties hereto in the same manner and with the same formality as this
Agreement is executed.
4.09 Each Party to this Agreement shall be responsible for the payment of all
costs, expenses, legal fees and disbursements incurred or to be incurred by
it in negotiation and preparing this Agreement and all documents required
to be delivered pursuant to this Agreement and in otherwise performing the
transactions contemplated by this Agreement, unless otherwise stated
herein.
4.10 No provision of this Agreement shall be deemed to be waived unless a waiver
is in writing. Any waiver of any default committed by any of the Parties
hereto in the observance or performance of any part of this Agreement shall
not extend to or be taken in any manner to effect any other default.
4.11 This Agreement may be signed or executed in separate counterparts and the
signing or execution of a counterpart shall have the same effect as the
signing or executing of an original.
4.12 Each Party shall, at the request of any Party, from time to time and at all
times hereafter, execute and deliver all deed, documents in writing and do
all acts and things as may be required to carry out the true intended
meaning of this Agreement.
4.13 All communications or notices given pursuant to this Agreement shall be in
writing and shall be deemed to have been given at the earlier of the date
when actually delivered to a party by personal delivery, commercial courier
or telephone facsimile transmission accompanied by a telephonic facsimile
receipt followed by a hard copy by United States mail or two (2) business
days after being deposited in the United States mail, certified or
registered mail, postage prepaid, return receipt requested, and addressed
as follows, unless and until any of such parties notifies the other in
accordance with this subsection of a change of address:
If to Xxxxx: 000 Xxxxxxxx Xx.
Xxxxxxx, Xxxxxxxxxx, 00000
Attn: Xxxxxxxxx X. Xxxxx Xx.
If to Addison York Insurance Brokers LTD: 00000 Xxxxxxxxx Xx. XX,
Xxxxx 000
Xxxxxxx, XX X0X 0X0, Xxxxxx
Attn: Primo Podorieszach
4.14 The headings herein contained are for reference only and shall not affect
the meaning or interpretation of any provision of this Agreement.
5
4.15 Xxxxx acknowledges that he has read this Agreement and understands the term
and conditions hereof.
IN WITNESS WHEREOF THE PARTIES HERETO have caused these presents to be executed
as of the date first above mentioned.
ADDISON YORK INSURANCE BROKERS, LTD.
Per: /s/ Primo Podorieszach
-----------------------------
/s/ Xxxxxxx X. Xxxxx /s/ Xxxxxxxx X. Xxxxx Xx.
----------------------------------- -----------------------------
Witness XXXXXXXXX X. XXXXX XX.
Xxxxxxx X. Xxxxx
-----------------------------------
[print name of witness]
6
AFFIDAVIT OF EXECUTION
I, Xxxxxxx X. Xxxxx, of the City of Monrovia, in the State of California, MAKE
OATH AND SAY:
3. I was personally present and did see XXXXXXXXX X. XXXXX XX. named in the
within (or annexed) instrument, who is personally known to me to be the
person named therein, duly sign and execute the instrument for the purposes
named therein.
2. That the same was executed at the City of Monrovia, in the State of
California, and that I am the subscribing witness thereto.
3. That I know XXXXXXXXX X. XXXXX XX. and he is in my belief of the full age
of l8 years.
SWORN BEFORE ME at the City of )
of Monrovia, in the State )
of California, this 5th day of )
November, 2003. ) /s/ Xxxxxxx X. Xxxxx
-------------------------------
[NOTARIAL SEAL
------------------------------- XXXXXXX X. XXXXX
A Notary Public in and for the State of Commission #1252209
California Notary Public - California
Los Angeles County
My Comm. Expires Feb. 8, 2004
NON-DISCLOSURE and
NON-COMPETITION AGREEMENT
THIS AGREEMENT MADE effective this 1st day of October, 2003.
BETWEEN:
ADDISON YORK INSURANCE BROKERS, LTD.
a body corporate incorporated pursuant to the laws
of the State of Delaware,
(hereinafter referred to as the "Corporation")
- and -
XXXXX REVOCABLE TRUST
a trust formed pursuant to the laws of the State of California
(hereinafter referred to as the "Trust")
WHEREAS the Corporation has requested an obligation of secrecy and
non-competition from the Trust as a condition of agreeing to the purchase of
certain assets (the "Purchased Assets") from Xxxxx Insurance Agency, Inc. in
accordance with the terms and conditions of an agreement for the sale and
purchase of assets dated effective as of the 1st day of October, 2003
(hereinafter referred to as the "Purchase Agreement");
AND WHEREAS the Trust has access to Confidential Information regarding the
Purchased Assets and the Business;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the premises
and mutual covenants herein contained and in consideration of the sum of FIVE
($5.00) DOLLARS now paid by the Corporation to the Trust (receipt of and
sufficiency of which is hereby acknowledged) and for other good and valuable
consideration the parties hereto and hereby agree as follows:
1.00 DEFINITIONS
1.01 Defined terms used in this Agreement and not otherwise defined herein shall
have the same meaning as is ascribed to such terms in the Purchase
Agreement.
1.02 "Agreement" means this Non-Disclosure and Non-Competition Agreement and all
amendments in writing made hereto.
1.03 "Territory" means the State of California.
1.04 In this Agreement words importing the singular shall include the plural and
words importing the masculine shall include the feminine or neuter, or vice
versa, as the context, or the number of or gender of the parties, from time
to time so requires. Words
2
importing persons shall include corporations, companies, partnerships,
syndicates, trusts and any number or aggregate of persons.
2.00 OBLIGATION TO NOT COMPETE
2.01 The Trust hereby covenants and agrees that for a period of five (5) years
from the date this Agreement, the Trust will not, directly or indirectly,
within the Territory:
(a) solicit for employment any employees of the Corporation;
(b) solicit insurance-related business from any of the Corporation's
customers; or
(c) own, operate, be engaged in the operation of, or have any financial
interest in, any business operations whether a proprietorship,
partnership, joint venture or private company, or otherwise, carry on
or be engaged in any venture similar to the Business of the
Corporation.
2.02 The parties intend that the covenants contained in paragraph 2.01 shall be
construed as separate covenants, one for each subdivision to which the
covenant applies. Except for geographic coverage, each such separate
covenant shall be deemed identical in terms to the covenant contained
above. In the event a court of competent jurisdiction determines that the
provisions of this covenant not to compete are excessively broad as to
duration, geographic scope or activity, it is expressly agreed that this
covenant not to compete shall be construed so that the remaining provisions
shall not be affected, but shall remain in full force and effect, and any
such over broad provisions shall be deemed, without further action on the
part of any person, to be modified, amended and/or limited, but only to the
extent necessary to render the same valid and enforceable in such
jurisdiction.
3.00 OBLIGATIONS TO NOT DISCLOSE
3.01 The Trust covenants and agrees with the Corporation that:
(a) the business connections, customers, Client Files, marketing, sales
techniques, financial statements, employee lists or names, procedures
and operations, and other intangible assets and aspects of the
Business have been established and maintained by the Corporation at
great expense and are protected as confidential information and trade
secrets, and are of great value to the Corporation (the "Confidential
Information"); and
(b) the Corporation would suffer great loss and injury if the Confidential
Information were disclosed or used in any way to the detriment of the
Corporation.
Therefore, the Trust shall not, directly or indirectly, use or disclose, or
cause or allow to be used or disclosed, to the Corporation's detriment, any
Confidential Information, secret, or proprietary information of the
Corporation. The foregoing limitation shall not apply to any Confidential
Information or proprietary information which has been voluntarily disclosed
to the public by the Corporation, independently developed and disclosed by
others, or otherwise enters the public domain through lawful means, not in
violation of the provisions of this subsection. In addition, the Trust
hereby covenants and agrees with the Corporation that upon demand by the
Corporation for the same, the Trust shall forthwith return any and all
Confidential Information in his possession to the Corporation.
3
3.02 The obligations contained in paragraph 3.01 shall survive the termination
of any discussions, negotiations or contractual relations between the Trust
and the Corporation.
3.03 In the event that a dispute shall arise as to whether or not certain
information is Confidential Information, then the Trust shall have the
burden of proving that such information is not Confidential Information.
4.00 MISCELLANEOUS
4.01 If any covenant or provision herein is determined to be void or
unenforceable in whole or in part, it shall not be deemed to affect or
impair the enforceability or validity of any other covenant or provision of
this Agreement or any part thereof.
4.02 The Parties to this Agreement agree that a breach by the Trust of any of
the covenants herein contained would result in damages to the Corporation
for which the Corporation could not adequately compensated by a monetary
award. Accordingly, the Trust agrees that in the event of any such breach,
in addition to, and not in substitution of, all other remedies available to
the Corporation at law or in equity, the Corporation shall be entitled as a
matter of right to apply to a Court of competent jurisdiction for such
relief by way of restraining order, injunction, decree or otherwise, as may
be appropriate to ensure compliance with the provisions of this Agreement
and the Trust shall be liable to the Corporation for all losses, costs,
legal fees, damages and expenses whatsoever which the Corporation may
sustain, pay or incur as result of or in connection with the Trust's
failure to keep, observe or perform, from and after the dates hereof, the
covenants to be kept, observed and performed by the Trust under this
Agreement.
4.03 The Parties agree that all restrictions in this Agreement are necessary and
are fundamental to the protection of the Business of the Corporation and
are reasonable and valid and all defences to the strict enforcement thereof
by the Corporation are hereby waived by the Trust.
4.04 This Agreement shall enure to the benefit and shall be binding upon the
parties hereto together with any of their respective shareholders,
directors, officers, managers, employees, successors and assigns and where
applicable, their respective heirs, executors and administrators.
4.05 The Trust shall not assign, or otherwise transfer, its rights or delegate
its duties or obligations under this Agreement without the prior written
consent of the Corporation. This Agreement shall be fully assignable by the
Corporation.
4.06 This Agreement and the rights and obligations hereunder shall be governed
by and construed in accordance with the laws of the State of California.
4.07 This Agreement constitutes the entire agreement between the parties
pertaining to the subject matter hereof, and supersedes all prior and
contemporaneous agreements, understandings, negotiations, and discussions
of the parties, whether oral or written,
4
pertaining to the subject matter hereof.
4.08 No amendment or variation of the terms, conditions, warranties, covenants,
agreements and undertakings set forth herein shall be of any force or
effect unless the same shall be reduced to writing duly executed by all
Parties hereto in the same manner and with the same formality as this
Agreement is executed.
4.09 Each Party to this Agreement shall be responsible for the payment of all
costs, expenses, legal fees and disbursements incurred or to be incurred by
it in negotiation and preparing this Agreement and all documents required
to be delivered pursuant to this Agreement and in otherwise performing the
transactions contemplated by this Agreement, unless otherwise stated
herein.
4.10 No provision of this Agreement shall be deemed to be waived unless a waiver
is in writing. Any waiver of any default committed by any of the Parties
hereto in the observance or performance of any part of this Agreement shall
not extend to or be taken in any manner to effect any other default.
4.11 This Agreement may be signed or executed in separate counterparts and the
signing or execution of a counterpart shall have the same effect as the
signing or executing of an original.
4.12 Each Party shall, at the request of any Party, from time to time and at all
times hereafter, execute and deliver all deed, documents in writing and do
all acts and things as may be required to carry out the true intended
meaning of this Agreement.
4.13 All communications or notices given pursuant to this Agreement shall be in
writing and shall be deemed to have been given at the earlier of the date
when actually delivered to a party by personal delivery, commercial courier
or telephone facsimile transmission accompanied by a telephonic facsimile
receipt followed by a hard copy by United States mail or two (2) business
days after being deposited in the United States mail, certified or
registered mail, postage prepaid, return receipt requested, and addressed
as follows, unless and until any of such parties notifies the other in
accordance with this subsection of a change of address:
If to the Trust: 000 Xxxxxxxx Xx.
Xxxxxxx, Xxxxxxxxxx, 00000
Attn: Xxxxxxxxx X. Xxxxx Xx.
If to Addison York Insurance Brokers LTD: 00000 Xxxxxxxxx Xx. XX,
Xxxxx 000
Xxxxxxx, XX X0X 0X0, Xxxxxx
Attn: Primo Podorieszach
4.14 The headings herein contained are for reference only and shall not affect
the meaning or interpretation of any provision of this Agreement.
4.15 The Trust acknowledges that it has reviewed this Agreement and understands
the term
5
and conditions hereof.
IN WITNESS WHEREOF THE PARTIES HERETO have caused these presents to be executed
as of the date first above mentioned.
ADDISON YORK INSURANCE BROKERS, LTD.
Per: /s/ Primo Podorieszach
-----------------------------
XXXXX REVOCABLE TRUST
Per: /s/ Xxxxxxxxx X. Xxxxx Xx.
-----------------------------
Xxxxxxxxx X. Xxxxx Xx. (trustee)
Per: /s/ Xxx X. Xxxxx
-----------------------------
Xxx X. Xxxxx (trustee)
NON-DISCLOSURE and
NON-COMPETITION AGREEMENT
THIS AGREEMENT MADE effective this 1st day of October, 2003.
BETWEEN:
ADDISON YORK INSURANCE BROKERS, LTD.
a body corporate incorporated pursuant to the laws
of the State of Delaware,
(hereinafter referred to as the "Corporation")
- and -
XXXXX REVOCABLE TRUST
a trust formed pursuant to the laws of the State of California
(hereinafter referred to as the "Trust")
WHEREAS the Corporation has requested an obligation of secrecy and
non-competition from the Trust as a condition of agreeing to the purchase of
certain assets (the "Purchased Assets") from Xxxxx Insurance Agency, Inc. in
accordance with the terms and conditions of an agreement for the sale and
purchase of assets dated effective as of the 1st day of October, 2003
(hereinafter referred to as the "Purchase Agreement");
AND WHEREAS the Trust has access to Confidential Information regarding the
Purchased Assets and the Business;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the premises
and mutual covenants herein contained and in consideration of the sum of FIVE
($5.00) DOLLARS now paid by the Corporation to the Trust (receipt of and
sufficiency of which is hereby acknowledged) and for other good and valuable
consideration the parties hereto and hereby agree as follows:
1.00 DEFINITIONS
1.01 Defined terms used in this Agreement and not otherwise defined herein shall
have the same meaning as is ascribed to such terms in the Purchase
Agreement.
1.02 "Agreement" means this Non-Disclosure and Non-Competition Agreement and all
amendments in writing made hereto.
1.03 "Territory" means the State of California.
1.04 In this Agreement words importing the singular shall include the plural and
words importing the masculine shall include the feminine or neuter, or vice
versa, as the context, or the number of or gender of the parties, from time
to time so requires. Words
2
importing persons shall include corporations, companies, partnerships,
syndicates, trusts and any number or aggregate of persons.
2.00 OBLIGATION TO NOT COMPETE
2.01 The Trust hereby covenants and agrees that for a period of five (5) years
from the date this Agreement, the Trust will not, directly or indirectly,
within the Territory:
(a) solicit for employment any employees of the Corporation;
(b) solicit insurance-related business from any of the Corporation's
customers; or
(c) own, operate, be engaged in the operation of, or have any financial
interest in, any business operations whether a proprietorship,
partnership, joint venture or private company, or otherwise, carry on
or be engaged in any venture similar to the Business of the
Corporation.
2.02 The parties intend that the covenants contained in paragraph 2.01 shall be
construed as separate covenants, one for each subdivision to which the
covenant applies. Except for geographic coverage, each such separate
covenant shall be deemed identical in terms to the covenant contained
above. In the event a court of competent jurisdiction determines that the
provisions of this covenant not to compete are excessively broad as to
duration, geographic scope or activity, it is expressly agreed that this
covenant not to compete shall be construed so that the remaining provisions
shall not be affected, but shall remain in full force and effect, and any
such over broad provisions shall be deemed, without further action on the
part of any person, to be modified, amended and/or limited, but only to the
extent necessary to render the same valid and enforceable in such
jurisdiction.
3.00 OBLIGATIONS TO NOT DISCLOSE
3.01 The Trust covenants and agrees with the Corporation that:
(a) the business connections, customers, Client Files, marketing, sales
techniques, financial statements, employee lists or names, procedures
and operations, and other intangible assets and aspects of the
Business have been established and maintained by the Corporation at
great expense and are protected as confidential information and trade
secrets, and are of great value to the Corporation (the "Confidential
Information"); and
(b) the Corporation would suffer great loss and injury if the Confidential
Information were disclosed or used in any way to the detriment of the
Corporation.
Therefore, the Trust shall not, directly or indirectly, use or disclose, or
cause or allow to be used or disclosed, to the Corporation's detriment, any
Confidential Information, secret, or proprietary information of the
Corporation. The foregoing limitation shall not apply to any Confidential
Information or proprietary information which has been voluntarily disclosed
to the public by the Corporation, independently developed and disclosed by
others, or otherwise enters the public domain through lawful means, not in
violation of the provisions of this subsection. In addition, the Trust
hereby covenants and agrees with the Corporation that upon demand by the
Corporation for the same, the Trust shall forthwith return any and all
Confidential Information in his possession to the Corporation.
3.02 The obligations contained in paragraph 3.01 shall survive the termination
of any
3
discussions, negotiations or contractual relations between the Trust and
the Corporation.
3.03 In the event that a dispute shall arise as to whether or not certain
information is Confidential Information, then the Trust shall have the
burden of proving that such information is not Confidential Information.
4.00 MISCELLANEOUS
4.01 If any covenant or provision herein is determined to be void or
unenforceable in whole or in part, it shall not be deemed to affect or
impair the enforceability or validity of any other covenant or provision of
this Agreement or any part thereof.
4.02 The Parties to this Agreement agree that a breach by the Trust of any of
the covenants herein contained would result in damages to the Corporation
for which the Corporation could not adequately compensated by a monetary
award. Accordingly, the Trust agrees that in the event of any such breach,
in addition to, and not in substitution of, all other remedies available to
the Corporation at law or in equity, the Corporation shall be entitled as a
matter of right to apply to a Court of competent jurisdiction for such
relief by way of restraining order, injunction, decree or otherwise, as may
be appropriate to ensure compliance with the provisions of this Agreement
and the Trust shall be liable to the Corporation for all losses, costs,
legal fees, damages and expenses whatsoever which the Corporation may
sustain, pay or incur as result of or in connection with the Trust's
failure to keep, observe or perform, from and after the dates hereof, the
covenants to be kept, observed and performed by the Trust under this
Agreement.
4.03 The Parties agree that all restrictions in this Agreement are necessary and
are fundamental to the protection of the Business of the Corporation and
are reasonable and valid and all defences to the strict enforcement thereof
by the Corporation are hereby waived by the Trust.
4.04 This Agreement shall enure to the benefit and shall be binding upon the
parties hereto together with any of their respective shareholders,
directors, officers, managers, employees, successors and assigns and where
applicable, their respective heirs, executors and administrators.
4.05 The Trust shall not assign, or otherwise transfer, its rights or delegate
its duties or obligations under this Agreement without the prior written
consent of the Corporation. This Agreement shall be fully assignable by the
Corporation.
4.06 This Agreement and the rights and obligations hereunder shall be governed
by and construed in accordance with the laws of the State of California.
4.07 This Agreement constitutes the entire agreement between the parties
pertaining to the subject matter hereof, and supersedes all prior and
contemporaneous agreements, understandings, negotiations, and discussions
of the parties, whether oral or written, pertaining to the subject matter
hereof.
4
4.08 No amendment or variation of the terms, conditions, warranties, covenants,
agreements and undertakings set forth herein shall be of any force or
effect unless the same shall be reduced to writing duly executed by all
Parties hereto in the same manner and with the same formality as this
Agreement is executed.
4.09 Each Party to this Agreement shall be responsible for the payment of all
costs, expenses, legal fees and disbursements incurred or to be incurred by
it in negotiation and preparing this Agreement and all documents required
to be delivered pursuant to this Agreement and in otherwise performing the
transactions contemplated by this Agreement, unless otherwise stated
herein.
4.10 No provision of this Agreement shall be deemed to be waived unless a waiver
is in writing. Any waiver of any default committed by any of the Parties
hereto in the observance or performance of any part of this Agreement shall
not extend to or be taken in any manner to effect any other default.
4.11 This Agreement may be signed or executed in separate counterparts and the
signing or execution of a counterpart shall have the same effect as the
signing or executing of an original.
4.12 Each Party shall, at the request of any Party, from time to time and at all
times hereafter, execute and deliver all deed, documents in writing and do
all acts and things as may be required to carry out the true intended
meaning of this Agreement.
4.13 All communications or notices given pursuant to this Agreement shall be in
writing and shall be deemed to have been given at the earlier of the date
when actually delivered to a party by personal delivery, commercial courier
or telephone facsimile transmission accompanied by a telephonic facsimile
receipt followed by a hard copy by United States mail or two (2) business
days after being deposited in the United States mail, certified or
registered mail, postage prepaid, return receipt requested, and addressed
as follows, unless and until any of such parties notifies the other in
accordance with this subsection of a change of address:
If to the Trust: 000 Xxxxxxxx Xx.
Xxxxxxx, Xxxxxxxxxx, 00000
Attn: Xxxxxxxxx X. Xxxxx Xx.
If to Addison York Insurance Brokers LTD: 00000 Xxxxxxxxx Xx. XX,
Xxxxx 000
Xxxxxxx, XX X0X 0X0, Xxxxxx
Attn: Primo Podorieszach
4.14 The headings herein contained are for reference only and shall not affect
the meaning or interpretation of any provision of this Agreement.
4.15 The Trust acknowledges that it has reviewed this Agreement and understands
the term and
5
conditions hereof.
IN WITNESS WHEREOF THE PARTIES HERETO have caused these presents to be executed
as of the date first above mentioned.
ADDISON YORK INSURANCE BROKERS, LTD.
Per: /s/ Primo Podorieszach
-----------------------------
XXXXX INSURANCE AGENCY, INC.
Per: /s/ Xxxxxxxxx X. Xxxxx Xx.
-----------------------------
SCHEDULE "G"
XXXXXXX XXXXX EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT
THIS AGREEMENT MADE effective this 1st day of October, 2003.
BETWEEN:
ADDISON YORK INSURANCE BROKERS, LTD.
a body corporate duly incorporated under
the laws of the State of Delaware and carrying on
business in the United States of America
(hereinafter referred to as the "Employer")
- and -
XXXXXXXXX X. XXXXX XX.
an individual, resident in the City of Arcadia
in the State of California
(hereinafter called the "Employee")
WHEREAS the Employer owns and operates a licensed general insurance brokerage in
the State of California under the business name of "Xxxxx Insurance Agency",
(the "Business");
AND WHEREAS the Employer is desirous of employing the Employee to serve the
Employer as an insurance brokerage manager (the "Manager");
AND WHEREAS it is a condition of employment that this Agreement be first
executed;
FNOW THEREFORE in consideration of the mutual covenants, provisos and
consideration paid, the receipt and sufficiency which is hereby acknowledged,
the parties hereto respectively covenant and agree as follows:
1.00 DEFINITIONS
1.01 In this Agreement and in any amendment hereto, the following terms shall
have the following meanings:
a) "Clients" mean any and all past, present or prospective customers of
the Employer;
b) "Commencement Date" means the 1st day of October, 2003.
c) "Owned Commission Revenue" means the commission revenue actually
received by the Employer from insurance companies in respect of the
sales of general insurance policies by the Business, but does not
include any:
i) revenues derived by the Purchaser from those persons or agencies
set forth on Schedule "A" attached hereto or any revenues derived
by the Purchaser from similar joint venture or revenue processing
agreements which the Purchaser may enter into either before or
after the Commencement Date;
ii) life insurance revenues;
1
iii) interest income; or
iv) finance charges.
1.02 Unless otherwise indicated, all dollar amounts referred to in this
Agreement or in the Schedules are in United States funds.
2.00 EMPLOYMENT
2.01 The Employer shall employ the Employee and the Employee agrees to serve the
Employer and to perform on behalf of the Employer all such reasonable
duties as may from time to time be authorized and directed by the
Employer's Board of Directors which, without limiting the generality of the
foregoing, shall include the rendering by the Employee in his capacity as a
Manager, management, supervisory and insurance sales services (the
"Services") to the Employer and others as may reasonably be required from
time to time.
3.00 REMUNERATION
3.01 For services to be rendered, the Employee shall be paid a monthly salary in
the amount of $8,333.33 per month during the Term of this Agreement. Such
salary shall be paid to the Employee on a monthly basis in arrears at the
end of each month during the Term hereof.
3.02 If, during the Term hereof, the Employer's earnings before income tax,
depreciation and amortization ("EBITDA") from the Business have increased
in excess of THIRTY (30%) PERCENT over the periods: (i) beginning on the
Commencement Date and ending on March 31, 2004; and (ii) beginning on April
1st, 2004 and ending on March 31st, 2005; then the Employee shall receive
from the Employer and the Employer shall pay to the Employee as a bonus,
FIFTY (50%) percent of that portion of the EBITDA which is in excess of
THIRTY (30%) PERCENT (the "EBITDA Bonus"). The EBITDA Bonus, if any, shall
be determined by the Employer and be paid to the Employee on or before 120
days from the end of the terms set forth in 3.02(i) and (ii). The parties
hereto agree that the EBITDA of the Employer from the Business shall be
determined by the Employer in accordance with Canadian generally accepted
accounting principles. In addition, when determining the EBITDA of the
Employer from the Business, the Employer shall take into account only the
Owned Commission Revenue.
3.03 The Employee shall receive from the Employer and the Employer shall pay to
the Employee as a commission, ONE HUNDRED (100%) percent of the commission
revenues received by the Employer and derived from sales of life insurance
policies sold by the Employee personally to the Employer's Clients (the
"Life Insurance Commission"). The Life Insurance Commission shall be paid
to the Employee in arrears on the last day of the month in which such
revenues are received by the Employer.
3.04 The remuneration provided in Section 3.00 herein shall be subject to
payroll deductions for income tax and for any and all other employee
deductions or remittances required by law and imposed upon the Employer to
collect and remit to any level of government or
2
regulatory authority.
4.00 TERM
4.01 Subject to the terms and conditions of this Agreement, the employment of
the Employee shall extend from the date hereof and continue until March 31,
2005 (the "Term"). This Agreement may be renewed for successive ONE (1)
YEAR terms upon the mutual agreement of the parties hereto.
5.00 DUTIES AND OBLIGATIONS OF THE EMPLOYEE
5.01 The Employee shall serve the Employer during the continuance of his
employment and he shall devote substantially his whole time and attention
to these duties and the provision of the Services and shall not directly or
indirectly engage in or be concerned in or interested in any other business
of any kind which may interfere, restrict or conflict with his duties
hereunder or the provision by him of the Services.
5.02 The Employee shall use his best efforts to market, service, promote and
sell the products and services of the Employer.
5.03 The Employee shall take all reasonable steps to promote the Employer's good
name and goodwill and shall not, under any circumstances, take any steps or
allow through inaction, the Employer's good name to be brought into
disrepute.
5.04 The Employee shall continue to be bound by all of the Employer's policies
in effect to date, or as amended from time to time with reasonable notice
to the Employee.
5.05 Subject to the terms and conditions of this Agreement, all fees,
compensation, money and other things of value received or realized as a
result of the Employee's rendering of the Services, be they sales,
supervisory, managerial or otherwise, and all income generated by the
Employee shall belong to the Employer, whether paid directly to the
Employee or to the Employer, if such income stems from the Business of the
Employer.
5.06 The Employee acknowledges that he will provide the Employer with a minimum
of FORTY (40) hours of Services each calendar week.
5.07 The Employee shall, at his own expense, hold and maintain in good standing
any and all such qualifications, professional designations, licenses and
permits as may be required, necessary or desirable for the provision of the
Services to the Employer and its Clients.
6.00 DUTIES AND OBLIGATIONS OF THE EMPLOYER
6.01 The Employer shall remunerate the Employee in accordance with the terms of
Article 3.00 hereof.
6.02 Subject to the terms and conditions governing the Employer, and all other
applicable laws
3
and regulations, the Employer shall have the power to:
a) assign Clients to the Employee;
b) review all work and Services performed by the Employee;
c) modify or cancel such work;
d) require the Employee to revise such work;
e) determine the time and manner of performance of all work; and
f) determine the standards of performance and, within reason, the
necessary hours of work.
6.03 The Employer shall provide, if and when possible the Employee with private
office space, secretarial assistance, general office supplies, reference
materials and research aids and such other facilities and services as are
customary and consistent for the proper performance of the Employee's
duties as a Manager.
7.00 HOLIDAYS/VACATIONS
7.01 The Employee shall be allowed FOUR (4) WEEKS of annual paid vacation.
7.02 All dates for holidays or vacations ("Vacation Dates") shall be agreed to
by both parties, acting reasonably and in a business and professional like
manner. All holiday or vacation requests must be submitted by the Employee
to the Employer at least 60 days in advance of the requested Vacation
Dates.
8.00 EMPLOYMENT RELATIONSHIP
8.01 The Employee agrees that he is an employee of the Employer and shall not be
deemed to be an independent contractor at any time.
8.02 There shall be no agency established in any form or manner.
8.03 The Employer is to have control of the manner, method and details of the
performance of the Services provided by the Employee at all material times
and, the Employee shall comply with all reasonable requests of the Employer
with respect to the Services, the location of performance of the Services,
and method of performance of the Services.
8.04 The Employee shall not, without the express written consent of the
Employer, take any action that would bind the Employer to any agreement
outside the normal day-to-day operations of the Employer or any agreement
in excess of $1,000.00 whether a part of the day-to-day activities or not.
8.05 The Employee, at all times, and for the purposes of this Agreement, shall
personally fulfil the performance of the Services, and shall not permit or
allow any other person to fulfil such Services at any time, without the
express consent of the Employer.
8.06 Any and all Clients found, solicited or discovered by the Employee and all
information
4
received by the Employee while providing the Services to the Employer as
set out in this Agreement shall remain the property of the Employer.
8.07 The Employee shall, upon the request of the Employer and at any time,
execute any form of confidentiality agreement then being used by the
Employer.
8.08 Nothing contained herein shall be construed to give the Employee an
interest in the tangible or intangible assets of the Employer.
9.00 TERMINATION
9.01 The Employer and the Employee agree that the Employer shall and hereby does
reserve the right to immediately terminate of the Employee for just cause.
Just cause being at the sole discretion of the Employer, acting reasonably,
and, includes, without restricting the generality of the foregoing, the
Employee:
a) being responsible for breach of any covenant herein to be performed by
the Employee;
b) performing the Services in an unsatisfactory or unprofessional manner;
c) conducting himself in such a manner that the retention of a Client is
jeopardized, a Client, is lost, or the goodwill of the Employer is
harmed in any way whatsoever;
d) ceases to be of good character;
e) failing or refusing to comply with the policies and standards and
regulations from time to time established by the Employer;
f) committing fraud, being dishonest or committing other misconduct in
the performance of services rendered on behalf of the Employer;
g) failing or refusing to faithfully or diligently perform any provision
of this Agreement or the usual and customary duties of his employment;
or
h) engaging in any form of substance abuse which may or may have the
effect of hindering the Employee in the performance of the Services.
9.02 Notwithstanding the foregoing, this Agreement shall immediately terminate
upon:
a) death of the Employee;
b) the Employee attaining the age of SIXTY-FIVE (65) years;
c) the Employee becoming insolvent or being adjudged bankrupt;
d) the failure of Employee to become bonded or continue to remain bonded
during the term of this Agreement;
e) the Employee being elected to hold office or accepting employment
which by operation of law places restrictions or limitations upon his
continued performance of the Services; or
f) the Employee becoming, without having obtained the Employer's consent,
a shareholder, an officer, director, agent or employee of another
Employer in a related business to that of the Employer;
g) a bona fide determination by the Employer to sell all or substantially
all of the assets of the Employer or to liquidate or discontinue the
Business;
h) the failure of Employee to hold and maintain in good standing any and
all
5
licences, permits, professional designations or qualifications
necessary or required by the Employee in order to provide the Services
hereunder; or
i) the end of the Term hereof if the same is not extended or renewed in
accordance with the terms hereof.
9.03 The Employee covenants and agrees with the Employer that the Employee shall
not be entitled to severance pay if this Agreement and any renewals thereof
is at anytime terminated in accordance with the terms hereof.
10.00 MISCELLANEOUS
10.01 This agreement merges with and supercedes all prior and contemporaneous
agreements, assurances, representations, and communications between the
parties hereto.
10.02 No amendment or variation of the terms, conditions, warranties, covenants,
agreements and undertakings set forth herein shall be of any force or
effect unless the same shall be reduced to writing duly executed by all
parties hereto in the same manner and with the same formality as this
agreement is executed.
10.03 This Agreement and the rights and obligations hereunder shall be governed
by and construed in accordance with the laws of the State of California.
10.04 No provision of this agreement shall be deemed to be waived unless a
waiver is in writing. Any waiver of any default committed by any of the
parties hereto in the observance or performance of any part of this
agreement shall not extend to or be taken in any manner to effect any other
default.
10.05 The parties hereto, and each of them, covenant and agree that each of them
shall and will, upon reasonable request of the other party, make, do,
execute or cause to be made, done or executed, all such further and other
lawful acts, deeds, things, devices and assurances whatsoever for the
better or more perfect and absolute performance of the terms and conditions
of this agreement.
10.06 In this agreement words importing the singular shall include the plural
and words importing the masculine shall include the feminine or neuter, or
vice versa, as the context, or the number of or gender of the parties, from
time to time so requires. Words importing persons shall include
corporations, companies, partnerships, syndicates, trusts and any number or
aggregate of persons.
10.07 The headings of the clauses contained in this agreement have been inserted
for convenience of reference only and shall not affect the interpretation
of this agreement.
10.08 Should any provision of this agreement be illegal, void or otherwise
unenforceable such provision shall be severable from the rest of this
agreement and the rest of this agreement
6
shall remain in full force and effect and be binding upon the parties as
though the said provision or provisions had never been included.
10.09 This agreement and its terms shall not be assigned by the Employee to any
other person, firm, corporation, or entity. This Agreement shall be fully
assignable by the Employer.
10.10 All notices, requests, demands, elections and other communications
hereunder shall be in writing and shall be deemed to have been duly given
only if delivered:
TO: THE EMPLOYER
355, 00000 Xxxxxxxxx Xxxx, XX
Xxxxxxx, Xxxxxxx, X0X 0X0
Attn: Primo Podorieszach
TO: THE EMPLOYEE
000 Xxxxxxxx Xx.
Xxxxxxx, Xxxxxxxxxx, 00000
Attn: Xxxxxxxxx X. Xxxxx Xx.
Either party may change its address for the notice by a notice given as
herein provided. A notice which is mailed will be considered as having been
given at such time as it would in the ordinary course of mail be received
by the party to which it is directed.
10.11 This agreement may be executed in any number of counterparts by any one or
more of the parties. Each executed counterpart shall be deemed to be an
original and such counterpart shall together constitute one and the same
agreement.
IN WITNESS WHEREOF the parties hereto have hereunto affixed their respective
signatures and this agreement is delivered all as of the date first above
written.
ADDISON YORK INSURANCE BROKERS LTD.
ADDISON YORK INSURANCE BROKERS, LTD.
Per: /s/ Primo Podorieszach
-----------------------------
/s/ Xxxxxxx X. Xxxxx /s/ Xxxxxxxxx X. Xxxxx Xx.
---------------------------------- ------------------------------
Witness XXXXXXXXX X. XXXXX XX.
SCHEDULE "A"
Xxxxxx & Associates, Inc.
PTL Insurance Brokers, Inc.
Pasadena Insurance Agency, Inc.
SCHEDULE "H"
PERMITTED ENCUMBRANCES
Safeco Credit Co. Inc. telephone system lease as per the Financing Statement
attached hereto.
SCHEDULE "I"
TAX RETURNS AND OTHER TAX MATTERS OF VENDOR
SCHEDULE "J"
VOLUME REPORTS AND SUMMARY PRODUCTION REPORTS
SCHEDULE "K"
VENDOR'S INSURANCE
SCHEDULE "L"
ESCROW AGREEMENT
ESCROW AGREEMENT
----------------
THIS ESCROW AGREEMENT ("Agreement") is made as of the 6th day of November, 2003.
BETWEEN
Addison York Insurance Brokers, Ltd.
a Delaware corporation
("Addison York")
AND
Xxxxx Insurance Agency, Inc.
a California corporation
("Vendor")
AND
Demiantschuk Xxxxxx Xxxxx & Xxxxxxxxx
a partnership formed pursuant to the
Laws of the Province of Alberta
(the "Escrow Agent")
AND
Xxxxx Revocable Trust
a trust formed pursuant to the laws of the State of California,
(hereinafter referred to as the "Shareholder")
WHEREAS Addison York, Vendor, Xxxxxxxxx X. Xxxxx Xx. and the Shareholder have
made, executed and delivered an Asset Purchase Agreement dated effective as of
the 1st day October, 2003 (the "Asset Purchase Agreement"), a copy of which has
been delivered to the Escrow Agent for reference purposes.
AND WHEREAS the terms of the Asset Purchase Agreement provide that on the
Closing Date, among other things, Addison York shall deliver to the Escrow
Agent: 1) a certified cheque or money order in the amount of $1,397,750.00 for
the Initial Deposit; and 2) a Promissory Note in the principal amount of
$174,719.00 for the Final Payment.
AND WHEREAS Addison York, Vendor and the Shareholder have made, executed and
delivered an Agency Agreement dated effective as of the 1st day October, 2003
(the "Agency Agreement"), a copy of which has been delivered to the Escrow Agent
for reference purposes.
AND WHEREAS the terms of the Agency Agreement provide that on the Closing Date,
among other things, the Shareholder shall deliver to the Escrow Agent a fully
completed and executed Securities Pledge Agreement along with share certificates
fully endorsed for transfer.
AND WHEREAS This Agreement is made, executed and delivered by Addison York and
Vendor pursuant to Article 3.00 of the Asset Purchase Agreement to provide for
the Escrow Fund (as hereinafter defined in this Agreement) from which Vendor may
be paid as provided in Sections 3.04 and 3.05 of the Asset Purchase Agreement in
the manner set forth herein.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements contained herein and in the Asset Purchase Agreement, the parties
hereto agree as follows:
1.00 Interpretation
-------------------
1.01 Any word, term or phrase that is defined in the Asset Purchase Agreement
and not otherwise defined herein shall, when used as a defined term in this
Agreement, have the same meaning that each respectively has when used as a
defined term in the Asset Purchase Agreement.
1.02 Unless otherwise indicated, all dollar amounts referred to in this
Agreement are in United States funds.
1.03 The term "Escrow Fund" means the amounts delivered to the Escrow Agent
pursuant to this Agreement, less distributions therefrom in accordance with
the terms of the Asset Purchase Agreement and this Agreement and shall
include any and all interest or other income received from the investment
or reinvestment thereof.
2.00 Appointment of the Escrow Agent.
-------------------------------------
2.01 Addison York, Shareholder and Vendor hereby constitute and appoint the
Escrow Agent as, and the Escrow Agent hereby agrees to assume and perform
the duties of, the Escrow Agent under and pursuant to this Agreement. The
Escrow Agent also acknowledges receipt of an executed copy of the Asset
Purchase Agreement, the Agency Agreement and the Securities Pledge
Agreement.
3.00 Establishment of Escrow Fund.
----------------------------------
3.01 The parties acknowledge that Addison York has delivered to the Escrow
Agent:
a) a Promissory Note for the Final Payment; and
b) the Initial Deposit in the form of a certified cheque or money order
in the amount of $1,397,750.00.
3.02 The Initial Deposit shall be used by the Escrow Agent to establish the
Escrow Fund in accordance with Section 3.03 of the Asset Purchase
Agreement.
3.03 Upon receipt by the Escrow Agent from Addison York of a certified cheque or
money order for the Final Payment as determined in accordance with the
terms of paragraph 3.04
of the Asset Purchase Agreement, the Escrow Agent shall deposit the Final
Payment into the Escrow Fund and return the Promissory Note to Addison
York.
4.00 Disposition of Escrow Fund.
--------------------------------
4.01 Addison York and Vendor hereby instruct the Escrow Agent and the Escrow
Agent hereby agrees to hold, invest and dispose of the Escrow Fund in
accordance with and subject to the terms, conditions, limitations and
restrictions contained in this Agreement and the Asset Purchase Agreement.
5.00 Receipt of Income.
-----------------------
5.01 The Escrow Agent shall receive and collect any and all interest and other
income of a kindred nature arising with respect to the Escrow Fund, and
shall reinvest such interest and other income. Any taxes payable with
respect to interest and other income accruing on the Escrow Fund shall be
the responsibility of the party to whom such interest or other income is
distributed hereunder.
6.00 Investment.
----------------
6.01 The Escrow Agent may invest and reinvest all cash funds from time to time
comprising part of the Escrow Fund in: (i) bonds or other obligations of
the government of the United States of America or Canada and not having
maturities of greater than one year; or (ii) demand or time deposits in,
certificates of deposit of, or money market accounts/funds of a depository
institution or trust company incorporated under the laws of the United
States of America or Canada, or any state or province thereof (as the case
may be) or the District of Columbia (if such institution has a Short-Term
Issuer Credit Rating of at least A-1+ and a Long-Term Issuer Credit Rating
of at least AAA, each from Standard & Poors, and a Xxxxx'x Bank Financial
Strength Rating of A+ and not having maturities greater than one year; or
(iii) if after the Adjustment is made and accounted for hereunder and in
accordance with the terms of Article 3.00 of the Asset Purchase Agreement,
then such other investments as the Vendor shall approve in writing. In the
absence of written direction delivered to the Escrow Agent by Addison York
and Vendor, the Escrow Agent shall invest the cash funds of the Escrow Fund
in a money market fund consisting of the securities described in clauses
(i) and (ii) of the preceding sentence.
7.00 Authority for Payments.
----------------------------
7.01 The Escrow Fund has been established, in part, to provide a means for
ensuring that the actual Earned Commission revenue from the Business for
the one year period following the Effective Date is at least $970,660.00.
Section 3.04 of the Asset Purchase Agreement provides that Addison York
shall prepare a Purchase Price reconciliation to show the actual
Commissions Earned from the Business. Accordingly, in connection with a
payment into or out of the Escrow Fund pursuant to Section 3.04 of the
Asset Purchase Agreement, the Escrow Agent shall make
payments into or out of the Fund pursuant to or in accordance with: (i) a
written authorization signed by Addison York and the Vendor delivered to
the Escrow Agent, which authorization shall set forth the amount of the
Adjusted Final Payment or the Escrow Fund Reduction, as the case may be; or
(ii) a certified copy of a final judgment of a court of competent
jurisdiction, provided, however, that a certified copy of a final judgment
shall serve as a valid determination only if the time for appeal has
expired and no appeal has been perfected or all appeals have been exhausted
or no further right of appeal exists.
7.02 If the Adjustment, as determined in accordance with the terms of paragraph
3.04 of the Asset Purchase Agreement, results in an Escrow Fund Reduction,
the Escrow Agent shall withdraw from the Escrow Fund the amount of the
Escrow Fund Reduction and pay such amount to Addison York by solicitors
trust cheque, certified cheque or money order as specified in the
authorization delivered pursuant to paragraph 7.01(i) or (ii) of this
Agreement.
7.03 Following the determination of the Adjustment in accordance with the terms
of paragraph 3.04 of the Asset Purchase Agreement, the Escrow Agent shall
deal with the monies deposited into the Escrow Fund in accordance with the
following terms:
(a) within three days of the end of the 15th month after the Effective
Date, the Escrow Agent shall deliver to the Vendor a solicitor's trust
cheque, a certified cheque or a money order for one sixth of all of
the monies then in the Escrow Fund;
(b) within three days of the end of the 27th month after the Effective
Date, the Escrow Agent shall deliver to the Vendor a solicitor's trust
cheque, a certified cheque or a money order for one fifth of all of
the monies then in the Escrow Fund;
(c) within three days of the end of the 39th month after the Effective
Date, the Escrow Agent shall deliver to the Vendor a solicitor's trust
cheque, a certified cheque or a money order for one fourth of all of
the monies then in the Escrow Fund;
(d) within three days of the end of the 51st month after the Effective
Date, the Escrow Agent shall deliver to the Vendor a solicitor's trust
cheque, a certified cheque or a money order for one third of all of
the monies then in the Escrow Fund;
(e) within three days of the end of the 63rd month after the Effective
Date, the Escrow Agent shall deliver to the Vendor a solicitor's trust
cheque, a certified cheque or a money order for one half of all of the
monies then in the Escrow Fund; and
(f) within three days of the end of the 75th month after the Effective
Date, the Escrow Agent shall deliver to the Vendor a solicitor's trust
cheque, a certified cheque or a money order for the balance of all of
the monies then in the Escrow Fund.
8.00 Securities Pledge Agreement and Directors Resolution
---------------------------------------------------------
The Escrow Agent shall receive the Securities Pledge Agreement, the Directors
Resolution and the share certificates associated therewith and shall deal with
the same in accordance with the following terms:
(a) if JIA is in default of the performance of its obligations as set forth in
the Agency Agreement and AYI notifies the Escrow Agent of that default and
demands in writing that the Securities Pledge Agreement and Directors
Resolution be released to AYI, then the Escrow Agent shall forthwith
deliver the
Securities Pledge Agreement (and the share certificates associated
therewith) and the Directors Resolution to AYI, and once delivered, the
Escrow Agent shall be released from any and all obligations concerning the
Securities Pledge Agreement and Directors Resolution; or
(b) upon the termination of the Agency Agreement and if no notice of default
has been received by the Escrow Agent from AYI in accordance with the terms
of sub-paragraph (a), then the Escrow Agent shall deliver the Securities
Pledge Agreement (and the share certificates associated therewith) and
Directors Resolution to the Shareholder and once delivered, the Escrow
Agent shall be released from any and all obligations concerning the
Securities Pledge Agreement (the share certificates associated therewith)
and Directors Resolution.
9.00 Fees and Expenses.
-----------------------
9.01 The Escrow Agent shall be entitled to fees for its services under this
Escrow Agreement in accordance with the fee schedule attached hereto as
Schedule "A" and to reimbursement for all reasonable costs, charges and
expenses (including reasonable attorney fees) incurred by it in connection
therewith. The Addison York shall be responsible for the payment of such
fees, costs, charges and expenses.
10.00 Limitations on Duties and Liabilities of the Escrow Agent.
-----------------------------------------------------------------
10.01 Unless otherwise expressly provided in this Agreement, the Escrow Agent
shall:
a) not be held liable for any action taken or omitted under this
Agreement so long as it shall have acted in good faith and without
negligence;
b) have no responsibility to inquire into or determine the genuineness,
authenticity, or sufficiency of any securities, checks, or other
documents or instruments submitted to it in connection with its duties
under and pursuant to this Agreement;
c) be entitled to deem (unless it has actual knowledge to the contrary)
the signatories of any documents or instruments submitted to it
pursuant to this Agreement as being those purported to be authorized
to sign such documents or instruments on behalf of the parties to this
Agreement and shall be entitled to rely (unless it has actual
knowledge to the contrary) upon the genuineness of the signatures of
such signatories without inquiry and without requiring substantiating
evidence of any kind;
d) not be responsible for tax reporting with respect to distributions;
and
e) have no responsibility or liability for any diminution which may
result from any investments or reinvestments made in accordance with
any provisions contained in this Agreement.
11.00 Resignation and Removal of the Escrow Agent.
----------------------------------------------------
11.01 The Escrow Agent may resign as such thirty (30) days following the giving
of prior written notice thereof to Addison York and Vendor. Similarly, the
Escrow Agent may be
removed and replaced following the giving of thirty (30) days' prior
written notice to the Escrow Agent by Addison York and Vendor.
Notwithstanding the foregoing, no such resignation or removal shall be
effective until a successor Escrow Agent has acknowledged its appointment
as such as provided in paragraph (c) below. In either event, upon the
effective date of such resignation or removal, the Escrow Agent shall
deliver the property comprising the Escrow Fund to a successor Escrow Agent
appointed by Addison York and Vendor as evidenced by a written notice
executed by Addison York and Vendor and filed with the Escrow Agent.
11.02 If Addison York and Vendor are unable to agree upon a successor Escrow
Agent, or shall have failed to appoint a successor Escrow Agent prior to
the expiration of thirty (30) days following the date of the notice of such
resignation or removal, the then acting Escrow Agent may petition any court
of competent jurisdiction for the appointment of a successor Escrow Agent,
or other appropriate relief, and any such resulting appointment shall be
binding upon all of the parties to this Agreement.
11.03 Upon acknowledgment by any successor Escrow Agent appointed in accordance
with the foregoing provisions of this Section 11.00 of the receipt of the
property then comprising the Escrow Fund, the then acting Escrow Agent
shall be fully released and relieved of all duties, responsibilities, and
obligations under this Agreement.
12.00 Indemnification of the Escrow Agent.
------------------------------------------
12.01 Addison York and Vendor, or their respective successors and assigns,
jointly and severally agree to indemnify and save and hold harmless the
Escrow Agent and its successors and assigns of, from and against all
losses, costs and expenses that the Escrow Agent shall sustain or incur as
a result of the Escrow Agent's involvement as a party thereto in any
litigation commenced prior to the termination of this Agreement, arising
from the performance by the Escrow Agent of its duties and responsibilities
under and pursuant to this Agreement that is not attributable in any
manner, or to any extent, to any action taken, or omitted, by the Escrow
Agent in connection with this Agreement in respect of which the Escrow
Agent shall have been adjudged to have been negligent.
13.00 Termination of Escrow Fund.
---------------------------------
13.01 This Agreement (other than Sections 9.00 and 12.00) shall automatically
terminate when all of the funds held by the Escrow Agent as part of the
Escrow Fund shall have been distributed, or otherwise disposed of, at any
time while this Agreement remains in effect by the Escrow Agent in
accordance with the terms of this Agreement.
14.00 Notices.
--------------
Any notice or other communication required or permitted hereunder shall be in
writing and shall be considered delivered in all respects when it has been
delivered by hand or overnight courier, by acknowledged facsimile transmission
followed by the original mailed by certified mail, return
receipt requested, or three (3) days after it is mailed by certified mail,
return receipt requested, first class postage prepaid, addressed as follows:
TO ADDISON YORK: Attn: Primo Podorieszach
355, 00000 Xxxxxxxxx Xxxx, XX
Xxxxxxx, Xxxxxxx, X0X 0X0
Fax: (000) 000-0000
TO VENDOR 000 Xxxxxxxx Xx.
Xxxxxxx, Xxxxxxxxxx, 00000
Attn: Xxxxxxxxx X. Xxxxx Xx.
TO THE ESCROW AGENT: Demiantschuk Xxxxxx Xxxxx & Xxxxxxxxx
1200, 0000 - 0xx Xxxxxx, XX
Xxxxxxx, Xxxxxxx, X0X 0X0
Attn: Xxxxxx Xxxxxx
Fax: (000) 000-0000
TO THE SHAREHOLDER Xxxxx Revocable Trust
000 Xxxxxxxx Xx.
Xxxxxxx, Xxxxxxxxxx, 00000
Attn: Xxxxxxxxx X. Xxxxx Xx.
or such other addresses as shall be similarly furnished in writing by such
party.
15.00 Continuance of Agreement.
-------------------------------
This Agreement shall be binding upon the parties hereto and their respective
successors and assigns.
16.00 Applicable Law.
---------------------
This Agreement shall be governed by and construed under and in accordance with
the laws of the Province of Alberta and the parties hereto agree to attorn and
submit all disputes arising hereunder to the jurisdiction of the Court of
Queen's Bench of Alberta. .
17.00 Counterparts.
-------------------
This Agreement may be exercised in counterparts, each of which shall be deemed
an original and all of which together shall constitute one and the same
agreement. Each of the parties to this Agreement agrees that a signature affixed
to a counterpart of this Agreement and delivered by facsimile by any person is
intended to be its, his or her signature and shall be valid, binding and
enforceable against such person.
IN WITNESS WHEREOF, the parties hereto has executed this Agreement as of the
date and year first above written.
ADDISON YORK INSURANCE BROKERS, LTD.
Per: /s/ Primo Podorieszach
-----------------------------
XXXXX INSURANCE AGENCY, INC.
Per: /s/ Xxxxxxxxx X. Xxxxx Xx.
-----------------------------
DEMIANTSCHUK XXXXXX XXXXX & XXXXXXXXX
Per: /s/ Xxx Xxxxxx
-----------------------------
XXXXX REVOCABLE TRUST
Per: /s Xxxxxxxxx X. Xxxxx Xx.
-----------------------------
Per: /s/ Xxx X. Xxxxx
-----------------------------
SCHEDULE "A"
Schedule of Fees
1. For making investments on behalf of the Escrow Fund - $100.00 per
investment;
2. For redeeming investments made on behalf of the Escrow Fund - $100.00 per
redemption;
3. For making scheduled payments to Vendor out of the Escrow Fund - $200.00
per scheduled payment;
4. Annual Administration Fee (payable annually in advance) - $200.00;
5. Reimbursement of reasonable costs, charges and expenses incurred by Escrow
Agent in connection with the Agreement, including but not limited to
reasonable attorney's fees and expenses incurred with outside counsel if
required;
6. Reasonable out-of-pocket expenses, i.e., postage, stationery, etc.; and
7. For any and all other matters not set forth herein the sum of $250.00 per
hour.
SCHEDULE "M"
JOINT VENTURE AGENCIES
1. Xxxxxx & Associates, Inc.;
2. PTL Insurance Brokers, Inc.; and
3. Pasadena Insurance Agency, Inc. 1.
SCHEDULE "N"
VENDOR'S EXISTING CARRIER APPOINTMENTS WITH A B+ OR HIGHER RATING
SCHEDULE "O"
PROMISSORY NOTE
PROMISSORY NOTE
---------------
WHEREAS, Xxxxx Insurance Agency, Inc. ("JIA"), Xxxxxxxxx X. Xxxxx Xx., Xxxxx
Revocable Trust and Addison York Insurance Brokers, Ltd. ("Addison"), have
entered into an Asset Purchase Agreement, dated effective as of the 1st day of
October, 2003 (the "Agreement"), pursuant to which JIA agreed to sell, transfer,
convey, assign and deliver to Addison, certain assets as more particularly
described Agreement;
AND WHEREAS JIA, Addison and Demiantschuk Xxxxxx Xxxxx & Xxxxxxxxx have entered
into an Escrow Agreement dated the 6th day of November, 2003, in order to deal
with the payment provisions set forth in Article 3.00 of the Agreement;
AND WHEREAS this promissory note is being delivered pursuant to paragraph 3.03
of the Agreement to be utilized and adjusted in accordance with the terms of
Article 3.00 of the Agreement and the terms and conditions of the Escrow
Agreement;
NOW THEREFORE FOR VALUE RECEIVED the undersigned Promissor, ADDISON YORK
INSURANCE BROKERS, LTD., a Delaware corporation, promises to pay to XXXXX
INSURANCE AGENCY, INC., the sum of ONE HUNDRED SEVENTY-FOUR THOUSAND SEVEN
HUNDRED AND NINETEEN ($174,719.00) DOLLARS (hereinafter called the "Principal
Amount") at ZERO (0%) PERCENT interest per annum, which sum shall be payable in
full on December 31st, 2005. Notwithstanding the foregoing, the Principal Amount
is subject to Adjustment as is more particularly set forth in Article 3.00 of
the Agreement. The Promissor waives presentment for payment, notice of protest,
demand for payment and notice of non-payment.
DATED at the City of Calgary, in the Province of Alberta this 1st day of
October, 2003.
ADDISON YORK INSURANCE BROKERS, LTD.
Per: /s/ Primo Podorieszach
-----------------------------
SCHEDULE "P"
AGENCY AGREEMENT
THIS AGENCY AGREEMENT IS MADE EFFECTIVE THIS 1st DAY OF OCTOBER, 2003
BETWEEN:
ADDISON YORK INSURANCE BROKERS, LTD.
a body corporate incorporated pursuant to the
laws of the State of Delaware
(hereinafter referred to as "AYI")
- and -
XXXXX INSURANCE AGENCY, INC.
a body corporate incorporated
pursuant to the laws of the State of California
(hereinafter referred to as "JIA")
- and -
XXXXX REVOCABLE TRUST
a trust formed pursuant to the laws of the State of California,
(hereinafter referred to as the "Shareholder")
WHEREAS AYI, JIA, Xxxxxxxxx X. Xxxxx Xx. and the Shareholder have made, executed
and delivered a certain Asset Purchase Agreement dated effective as of the 1st
day of October, 2003 (the "APA").
AND WHEREAS as at the date of the APA, AYI may not have obtained all of the
necessary regulatory approvals to operate as an insurance broker or agent in the
State of California and AYI has not obtained all of the Carrier Appointments
from those carriers listed in Schedule "N" of the APA.
AND WHEREAS pursuant to the terms of the APA, JIA has agreed to enter into this
Agency Agreement in order to allow AYI to process its clients insurance policies
through JIA, whereby AYI shall receive all revenues therefrom and shall pay all
of JIA's reasonable out of pocket expenses and costs associated therewith in
accordance with the terms hereof.
AND WHEREAS the Shareholder has agreed to enter into this Agency Agreement and
the Securities Pledge Agreement (attached as Schedule "D" hereto) as additional
security for the performance of JIA's obligations to AYI under the Agency
Agreement.
NOW, THEREFORE, in consideration of the mutual premises, covenants and
agreements contained herein and in the APA, the parties hereto agree as follows:
1.00 DEFINITIONS
2
1.01 Any word, term or phrase that is defined in the APA and not otherwise
defined herein shall, when used as a defined term in this Agreement, have
the same meaning that each respectively has when used as a defined term in
the APA.
1.02 The following are the Schedules which are to be attached to and are
incorporated into this Agreement by reference and are deemed to be a part
hereof:
a) Schedule "A" Budget;
b) Schedule "B" Bank Accounts;
c) Schedule "C" Director's Resolution;
d) Schedule "D" Securities Pledge Agreement; and
e) Schedule "E" Employees.
2.00 WARRANTIES AS TO LICENCE
2.01 JIA for the benefit of AYI represents, warrants and covenants that:
a) JIA holds all the licenses and permits required for an agent and an
agency in the State of California;
b) the employees of JIA hold all applicable licenses and permits required
for the performance of their duties as insurance brokers or otherwise;
c) JIA and its employees will maintain in good standing throughout the
Term of this Agreement, all the licenses and permits referred to in
paragraphs 2.01(a) and (b);
d) JIA will not knowingly or negligently do, or omit to do, anything that
results in, or is likely to result in, the suspension or revocation of
such licenses or permits, during the Term of this Agreement;
e) JIA shall maintain the appropriate trust accounts and account balances
all in accordance with the laws, rules and regulations governing the
operation of an insurance agency and brokerage in the State of
California; and
f) JIA shall maintain in good standing its Carrier Appointment Contracts
with those insurance carriers or wholesalers set forth on Schedule "N"
of the APA and any other carrier or wholesaler appointments acquired
during the Term hereof.
3.00 WORKING RELATIONSHIP OF JIA AND AYI
3.01 Except as otherwise specifically authorized by AYI in writing, JIA shall,
for the sole and exclusive benefit of AYI and for the benefit of no other
person(s) whatsoever, market, sell, distribute, place and write general,
health and life insurance products to those persons set forth in the Client
Files and to any and all other potential customers who may wish to purchase
general, health and life insurance products.
3.02 AYI shall, during the Term of this Agreement, and to the extent required to
enable JIA to function as an agent or broker, provide without charge to
JIA, the basic office space and equipment, required for the administration
of functioning of JIA as an agent or broker. AYI shall not be required to
furnish the same for the conduct of any other business of JIA
3
than the business of an insurance agent or broker.
3.03 Subject to AYI's prior approval of all staffing levels, salaries and
benefits, JIA shall, during the Term of this Agreement, provide all
necessary insurance sales and brokerage, clerical and stenographic
services, required for the administration and functioning of JIA as an
agent or broker.
3.04 JIA shall assure that all files, computer records, and accounting records
kept by JIA and all other internal operating systems of JIA are marked or
designated to indicate which documents, matters and entries pertain to
Client Files. JIA shall maintain a software system that is capable of
generating reports listing all of the Client Files and basic related
information.
3.05 Upon the request of AYI, JIA shall, in a timely fashion, provide to AYI any
and all reports, financial statements, bank reconciliations, contracts,
agreements, memorandums or other documents of any nature or kind whatsoever
concerning the Business or Purchased Assets, including the monthly
financial statements of the Business which shall be delivered to AYI within
15 days of the end of each month during the Term hereof. In addition, JIA
shall permit AYI and its employees, agents, professional advisors, counsel
and accountants or other representatives to have access to all of the
books, accounts, records, agreements, contracts, documents, instruments and
other data of JIA (including, without limitation, all corporate, business
and accounting records of JIA) and JIA shall furnish to AYI such financial
and operating data, agreements, contracts, documents, instruments, and
other materials and information with respect to JIA or the Business and the
Purchased Assets as AYI shall from time to time request.
3.06 AYI shall be responsible for the following reasonable and provable expenses
of JIA:
a) all out of pocket expenses with respect to the operation of the
Business;
b) all of the costs and expenses incurred by JIA in respect of those
matters set forth in paragraph 3.03;
c) all required license fees and other required regulatory fees necessary
to maintain JIA's status as an insurance agency or brokerage under the
laws of the State of California or under the rules of any professional
or regulatory or licensing body having jurisdiction over the affairs
of JIA or an insurance agency or brokerage in general; and
d) other reasonable and necessary operational expenses incurred in the
normal day to day operation of the Business.
4
All as set forth in the budget (the "Budget") attached as Schedule "A"
hereto and forming a part hereof. JIA warrants and agrees that it must
obtain the written consent of AYI prior to making any capital expenditures
in respect of the better operation of the Business or the servicing of the
Client Files for which it intends to hold AYI responsible for the payment
thereof.
3.07 JIA represents and warrants to AYI that it will conduct its operations as
an insurance agency or broker in accordance with the established norms and
customs of the insurance industry and will operate the Business and service
the Client Files as would a prudent operator handling such matters.
3.08 JIA represents and warrants to AYI that it shall, process the revenues
received by it from the Business and Client Files through its general and
trust bank accounts as more fully described in Schedule "B" attached hereto
and forming a part hereof (the "Accounts"). Subject to the normal and
reasonable controls placed on such Accounts by the relevant banking
institution, JIA agrees that AYI shall have the right to impose its own
controls over the Accounts, to designate the signing officers on the
Accounts and to change the signing officers on the Account from time to
time as AYI deems prudent and necessary. In order to give effect to the
foregoing, JIA further agrees to execute the directors resolution (the
"Directors Resolution") attached as Schedule "C" hereto and forming a part
hereof and deliver the same to the Escrow Agent.
3.09 The Shareholder hereby agrees to execute the Securities Pledge Agreement
attached as Schedule "D" hereto and deliver the same to the Escrow Agent to
be held by the Escrow Agent and dealt with by the Escrow Agent in
accordance with the following terms:
(a) if JIA is in default of the performance of its obligations as set
forth in this Agreement and AYI notifies the Escrow Agent of that
default and demands in writing that the Securities Pledge Agreement
and Directors Resolution be released to them, then the Escrow Agent
shall forthwith deliver the Securities Pledge Agreement and the
Directors Resolution to AYI, and once delivered, the Escrow Agent
shall be released from any and all obligations concerning the
Securities Pledge Agreement and the Directors Resolution; or
(b) upon the termination of this Agreement and if no notice of default has
been received by the Escrow Agent from AYI in accordance with the
terms of sub-paragraph (a), then the Escrow Agent shall deliver the
Securities Pledge Agreement and the Directors Resolution to the
Shareholder and once delivered, the Escrow Agent shall be released
from any and all obligations concerning the Securities Pledge
Agreement and the Directors Resolution.
4.00 OWNERSHIP OF CLIENT FILES AND REVENUES THEREFROM
4.01 JIA acknowledges and agrees that the Client Files and all associated
tangible and intangible property, rights and choses in action associated
therewith are and shall remain the sole and exclusive domain and personal
property of AYI whether such files or documents therein or associated
rights bear or include the name of JIA or any other trade name or style of
or associated with JIA.
5
6
4.02 JIA further acknowledges that any new client files or insurance business
originated by JIA or AYI or their personnel from and after the date hereof
and all associated tangible and intangible property rights and choses in
action shall be and will remain the sole and exclusive domain and personal
property of AYI, whether such files or documents therein or associated
rights bear or include the name of JIA or any other trade name or style of
or associated with JIA and shall form part of the Client Files.
4.03 Any and all commissions, fees, interest income earned on the Accounts or
otherwise, contingency fees or other revenues of any kind nature or
description whatsoever received by JIA in connection with any Client File
or the Business shall be the sole and exclusive property of AYI (such
commissions, fees, interest income, contingency fees or revenues of any
kind nature or description whatsoever being referred to hereafter as the
"Revenues".
4.04 JIA shall, immediately upon the demand of AYI, pay to AYI any and all sums
due and owing to AYI pursuant to the terms of this Agreement.
5.00 TERM OF AGREEMENT
5.01 This Agreement shall be terminated upon the occurrence of the earliest of
the following events:
a) the date upon which AYI obtains:
i) all of the necessary regulatory approvals to operate as an
insurance broker or agent in the State of California;
ii) all of the necessary regulatory approvals in respect of the
Assignment of employees to AYI; and
iii) all of the Carrier Appointments from those carriers listed in
Schedule "N" of the APA (or such lesser number of Carrier
Appointments which may be satisfactory to AYI in its sole and
unfettered discretion); or
b) the 31st day of December, 2018; or
c) the date that AYI delivers written notice to JIA and the Shareholder
that it is terminating this Agreement; (the "Term").
5.02 Immediately upon the termination of this Agreement JIA agrees to:
a) assign all of its right title and interest in and to any and all
employment agreements, non-competition agreements and confidentiality
agreements which it may have with those employees set forth on
Schedule "E" attached hereto and forming a part hereof and with any
other employee not listed on Schedule "E" but who may be employed by
JIA at the time of termination of this Agreement. Notwithstanding the
foregoing, AYI, in its sole and unfettered discretion, retains the
right not to accept the assignment of any particular employee's
agreement; and
b) pay over to AYI any and all monies remaining in the Accounts which are
or will become due and owing to AYI pursuant to the terms of this
Agreement
7
5.03 It is further agreed by AYI and JIA that after termination of this
contract:
a) AYI agrees to allow JIA to retain copies from such files of those
documents which by operation of law or in accordance with the
regulatory requirements either of the insurance licensing agencies or
of licensing or agency agreements with insurers, JIA may be
specifically obliged to retain; and
b) JIA further warrants that he will keep the files available and intact
and in order for the Government and insurance industries prescribed
time limits and that he will produce and make available all files,
papers and information that he possesses, in order to assist AYI in
any future query or disputes regarding the Client Files.
6.00 ERRORS AND OMISSIONS AND OTHER INSURANCE
6.01 During the Term hereof, JIA represents and warrants that it shall place and
will keep in effect and in good standing the following insurance coverages
for the benefit of AYI:
a) an Errors & Omission policy covering JIA with such coverage and limits
as shall be approved by AYI in its sole discretion;
a) proper and adequate coverage with respect to the Client Files and
Fixed Assets of AYI with such coverage and limits as shall be approved
by AYI in its sole discretion;
a) proper and adequate coverage with respect to the Business, the
Premises and the operations of an insurance agency thereon with such
coverage and limits as shall be approved by AYI in its sole
discretion; and
a) any other forms of insurance which AYI may require from time to time
in its sole discretion with such coverage and limits as shall be
approved by AYI.
6.02 AYI shall be responsible for the payment of all costs and expenses related
to the placement of the insurance matters set forth in paragraph 6.01
6.03 If after the date hereof and until the termination hereof, there is an
errors or omissions ("E&O") claim made against JIA in respect of the Client
Files, then AYI shall pay all costs up to the deductible portion on JIA's
E&O policy, including any reasonable legal expenses incurred thereon.
6.04 JIA shall notify AYI immediately of any possible claim or occurrence that
could cause an E&O claim against JIA.
7.00 GENERAL
7.01 Notices to be given under this Agreement shall be given in writing to the
Parties at the following respective addresses, namely:
8
TO: Addison York Insurance Brokers, Ltd.
355, 00000 Xxxxxxxxx Xxxx, XX
Xxxxxxx, Xxxxxxx, X0X 0X0
Attn: Primo Podorieszach
TO: Xxxxx Insurance Agency, Inc.
000 Xxxxxxxx Xx.
Xxxxxxx, Xxxxxxxxxx, 00000
Attn: Xxxxxxxxx X. Xxxxx Xx.
Attention: Xx. Xxxx Xxxxx
TO: Xxxxx Revocable Trust
000 Xxxxxxxx Xx.
Xxxxxxx, Xxxxxxxxxx, 00000
Attn: Xxxxxxxxx X. Xxxxx Xx.
or to such address as any Party may for itself stipulate by written notice
in accordance with this paragraph 7.01, and any notice so sent by single,
or double registered mail shall be deemed received on the seventh (7) day
following such posting unless the contrary be proved, the burden of such
proof being that of the person whose receipt of such notice in question.
7.02 This agreement shall be governed by, and be construed in accordance with,
the laws of the State of California. In addition, the parties hereto waive
trail by jury and agree to submit to the personal jurisdiction and venue of
a court of subject matter jurisdiction located in Los Angeles County, State
of California.
7.03 The Recitals herein form part of this Agreement in as full and effective a
manner as if incorporated herein as numbered clauses.
7.04 Should any clause or other portion of this Agreement be declared illegal,
void, invalid, or inoperative by any competent Court, then this Agreement
shall be read as if such impugned clause or portion had never been included
in the Agreement, and so as to give the Agreement as full and forceful a
reading as possible consistent with the deletion of such impugned clause or
portion.
7.05 In this Agreement, the masculine shall include the feminine and vice versa,
the personal the impersonal and vice versa, the individual the corporate
and vice versa, and the singular the plural and vice versa, all as the
context may require.
7.06 No purported amendment to, variation of, or departure from or indulgence of
any term of, this Agreement shall be of any force or effect whatever unless
and until evidence in writing and that writing executed by all the Parties
hereto in the same fashion as the execution hereof.
7.07 This Agreement may not be assigned by JIA or the Shareholder without the
prior written consent of AYI, which consent may be unreasonably withheld.
7.08 Each Party agrees for the benefit of the other to do all things and to
execute all
9
documents which may reasonably be required in order to give effect to this
Agreement.
IN WITNESS WHEREOF the Parties hereto have hereunder caused to be set hands and
seals as at the date first above written.
ADDISON YORK INSURANCE BROKERS, LTD.
Per: /s/ Primo Podorieszach
-----------------------------
XXXXX INSURANCE AGENCY, INC.
Per: /s/ Xxxxxxxxx X. Xxxxx Xx.
-----------------------------
DEMIANTSCHUK XXXXXX XXXXX & XXXXXXXXX
Per: /s/ Xxx Xxxxxx
-----------------------------
XXXXX REVOCABLE TRUST
Per: /s Xxxxxxxxx X. Xxxxx Xx.
-----------------------------
Per: /s/ Xxx X. Xxxxx
-----------------------------
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SCHEDULE "A"
BUDGET
11
SCHEDULE "B"
BANK ACCOUNTS
12
SCHEDULE "C"
DIRECTORS RESOLUTION
13
SCHEDULE "D"
Securities Pledge Agreement
14
SCHEDULE "E"
EMPLOYEES OF JIA
